Online estate agent says higher than expected sales levels despite weakest quarterly house price performance since 2011.
The UK housing market is ‘defying expectations’ with stronger than expected sales, despite weakening house prices, according to Zoopla.
The online property portal said the market had seen a boost in the number of homes put up for sale, and that 500,000 homes sales are now expected in the first half of this year, well above the levels seen in the aftermath of the global financial crisis.
However, the figure, if achieved, would still be the lowest half year transaction numbers seen in the UK since 2013, aside from the pandemic affected 2020 figures.
Annual house price growth has slowed to 4.1% year-on-year from 9% a year ago, with prices 1% lower than Ocotber 2022.
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The firm said the quarterly growth rate had been negative for the last three months, which it said was the “weakest rate of quarterly growth since 2011” amid “swift repricing nationally”. It added that 65% more homes were available this March compared to the same month last year.
Richard Donnell, executive director at Zoopla, said: “The housing market is arguably more balanced than it has been for more than three years.
“Levels of supply have recovered and buyers and sellers are not miles apart on where they see pricing and this means deals are being agreed at an increasing rate.”
The property market took a hit after the disastrous mini-budget in September last year and mortgages reached 14-year highs. Sales agreed in March were 16% lower than the same time last year but 11% higher than 2019, Zoopla said, while buyer demand is 43% lower than a year ago. Demand is, however, still 16% higher now than this time in 2019, Zoopla said.
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Donnell continued: “Prices are drifting lower compared to a year ago but fears of a major downturn in prices are overdone.
“Falling mortgage rates and a strong labour market are supporting activity levels from committed movers who need to be realistic on price if they are serious about moving home in 2023.”
He predicted: “We expect to see levels of activity continue to steadily improve over Easter and into the summer and H2.”
This is more optimistic than the gloomy outlook given by figures from the Nationwide figures last month. House prices fell by 0.8% in March, it said, dropping the largest amount year-on-year for more than a decade, the building society said.
Robert Gardner, Nationwide’s chief economist, said: “It will be hard for the market to regain much momentum in the near term since consumer confidence remains weak and household budgets remain under pressure from high inflation.”
Although, housebuilder Crest Nicholson last month indicated the housing market was slowly recovering and Rightmove said prices rose slightly between February and March.
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Zoopla said sellers are having to reduce the prices of homes to shift them, by an average of 4% (£14,000), and homes are taking longer to reach the stage of being sold ‘subject to contract’ – by 71% (15 days) compared to 12 months ago.
Kevin Shaw, national sales managing director at estate agents Leaders Romans Group, said he was “confident” about the coming months. “As spring has sprung, the daffodils are out and we’re entering the traditional season of house moves. Added to that, an increase of ‘sold’ signs is providing some encouragement, as is the fact that house price correction has now taken place, interest rates and mortgage rates are unlikely to go much higher and lenders are competing for borrowing rates.”
He also predicted a boost for the second hand market with the end of Help to Buy, which he explained “will mean many first-time buyers opting for used properties in place of brand new homes”.
By Emily Twinch
Source: Housing Today