Property prices have increased by 4.1 per cent in the past 12 months, new data show, despite many predicting that house prices would fall as much as by 10 per cent this year.
Previously experts said house prices could fall by 10 per cent over the next two years due to rising mortgage rates and the squeeze on household incomes, but instead they are remaining more resilient than expected.
Zoopla’s house price index found that market conditions at the end of March are better than many thought they would be, with clear evidence that buyers and sellers are striking deals at an increasing rate despite modest price reductions.
The number of new sales agreed is up, rising 11 per cent compared to 2019, with data from the past nine months showing the UK is on track for half a million housing sales in the first half of 2023 – this is a third higher than the level of sales in the years following the global financial crisis.
Sales are now being driven by the greater number of homes available to buy, Zoopla said, which is 65 per cent higher than this time last year. The average estate agent now has 25 homes available compared to a low of 14 this time last year.
This is good news for buyers as a lack of supply was causing significant price increases.
However, property prices have started to fall in recent times, dropping one per cent since October, and 0.7 per cent in the past three months, the biggest drop for a three-month period since 2011.
This highlights the effect rising mortgage rates are having on the market.
Demand for homes is also down on this time last year but is at its highest since October as falling mortgage rates and a strong labour market support buyer interest.
While buyers’ choice continues to improve, sales are also taking longer. The average time from a home being first listed, to going under offer and being sold ‘subject to contract’, jumped by 71 per cent compared to 12 months ago (an increase of 15 days). Scottish properties currently have the shortest sales periods at 28 days (as homes are marketed with a survey and valuation) compared with London, which has the longest time to sell at 44 days.
In order to be able to purchase a property, Zoopla said buyers need to be willing to make sensible pricings and make modest downward adjustments to their asking prices if they want to move. Some are accepting asking price discounts averaging 4 per cent (£14,000) as buyers have more options.
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.
“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. We expect to see levels of activity continue to steadily improve over Easter and into the summer.”