Growth was driven by a rebound in three and four-bedroom homes
Recent data has revealed that the UK is currently experiencing the highest supply of homes for sale in eight years. This greater buyer choice will likely keep property prices in check for 2024. Sales are growing but need to catch up with the number of homes for sale.
The supply growth has been driven by a rebound in three—and four-bedroom homes for sale as existing owners return to the market and feel more confident about moving. The average estate agent office has had 31 properties for sale, compared to 26 properties last year.
Increase in market listings
While most homes for sale are new to the market, 31% were marketed in 2023. Rising mortgage rates saw demand weaken, but homeowners have now returned to the market to seek a home move. This increase in the supply of homes for sale boosts choice for buyers and is expected to keep house price growth in check over the rest of 2024.
Sales agreed are up 13% year on year, but across most regions, the growth in new homes for sale is outpacing the growth in the number of sales agreed. One notable region that has seen well above-average growth in the number of homes for sale is the South West. There are a third more homes for sale than last year.
Regional variations and policy impacts
Tax and planning changes concerning holiday lets and the prospect of double council tax for second homes are likely to exacerbate the increase in homes for sale in this region, which has the highest levels of second home ownership. The outcome of the general election with a new Labour government is expected to have a modest impact on housing market activity.
The data highlights that there are currently 392,000 homes in the sales pipeline working their way through to completion in 2024. An increase in fall-throughs is unlikely due to the election announcement, as there is no considerable policy divide between the two main parties. Some buyers may have delayed their decision early in the home-buying process. Still, the underlying motivations to move remain strong for others who will likely continue their search for a home and secure a sale in 2024.
Market outlook for the remainder of 2024
The pace at which sales are being agreed is likely to slow in the short term, which means the total number of sales for 2024 could drop below 1.1 million. The north and south divide in annual house price growth continues with modest house price falls across Southern England. This split in house price inflation is most evident at a city level, with the strongest house price growth in Belfast (+3.6%), Burnley (+2.5%), and Bolton (2.4%), and the highest house price falls in Ipswich (-3%), Hastings (-2.7%), and Norwich (-2.4%).
Affordability pressures, exacerbated by higher mortgage rates, primarily drive the variation in house price growth. Across the south of England, price falls are focused on coastal cities and those where prices jumped higher during the pandemic during the ‘race for space’, where demand is now weaker. House prices are rising in cities with below-average house prices, where the impact of higher mortgage rates is less pronounced.
North/South divide in house prices expected to persist
The findings also underscore the ongoing north/south divide in house price growth, which is anticipated to continue throughout 2024 as incomes and house prices re-align across the country. The increase in the supply of homes for sale signifies renewed confidence among homeowners, some of whom postponed moving decisions in 2023.
In recent months, the quarterly rate of house price inflation has accelerated as more sales are agreed upon and prices stabilise. It is crucial for those intent on moving in 2024 to price their homes realistically if they wish to secure a sale.
Future market trends
The renewed homeowner confidence indicates a healthier market environment, fostering steady but controlled growth in house prices. As interest rates show signs of stabilising, more homeowners may feel encouraged to proceed with long-awaited moves, thus contributing to the overall dynamics of the housing market.
Buyers and sellers should remain informed about regional trends and be prepared to adapt to the evolving landscape. Understanding these patterns can facilitate more informed decisions, whether purchasing a first home or selling a long-term residence.
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