UK Property Market: Looking Ahead to 2024

Zoopla’s latest insights reveal a significant upturn in the UK housing market, with new sales in the final weeks of 2023 showing a 17% increase compared to the previous year. This boost in activity reflects a growing demand, almost 20% higher than the same period last year, despite earlier concerns of high mortgage rates dampening the market.

An expansion in the number of available homes for sale has contributed to this positive trend, improving buyer choice and fostering a more balanced approach to pricing. Consequently, Zoopla’s House Price Index indicates a slowdown in annual price declines to 1.1% in November 2023, a notable decrease from the 7.2% drop observed a year earlier.

Cash purchases have notably influenced the market, with a third of all 2023 property sales made in cash, while sales relying on mortgages fell by 30%. This shift comes despite predictions of significant price drops throughout the year. Several factors, including a robust labour market and stringent mortgage affordability tests introduced in 2015, have helped prevent an overvaluation in the housing market and assisted many households in adapting to the higher mortgage rates.

Zoopla’s research also shows a growing trend of buyers looking to relocate further from their current residences, particularly in high-value markets in southern England, where the cost of upsizing is more substantial. Nearly half of the potential movers in these regions are seeking homes over 10 miles away, searching for better value and more space.

Looking ahead to 2024

The momentum in property sales is expected to persist, driven by a seasonal increase in demand and a gradual easing of mortgage rates. However, affordability remains a challenge, especially for first-time buyers, who are predicted to be the largest buyer group over the next two years, spurred by the rapid increase in rental costs. Average rents have risen more quickly than mortgage repayments in the past three years.

Richard Donnell, executive director at Zoopla, comments on the market’s resilience: “The housing market has been more resilient than many expected over 2023… UK housing still looks expensive by historic standards which is why we expect UK house prices to fall a further 2% over 2024 as prices and incomes re-align.”

Tom Bill, head of UK residential research at Knight Frank, observes a notable increase in market activity and confidence as inflation stabilizes and mortgage rates face downward pressure.

Matt Thompson, head of sales at Chestertons, adds that the build-up of demand due to economic uncertainties this year is prompting continued buyer activity, suggesting a vibrant start to the property market in 2024.