Buyers are back in market and demand is now 11% up on this time last year. This is good news for sellers, as the number of sales agreed climbs 15%.

Sales market activity continues to improve

Pent up demand is returning to the housing market as mortgage rates return to 4-5%, which is good news for sellers.

More buyers are looking to secure homes, with demand up 11% compared to this time last year.

But even more importantly, the number of sales agreed is also up 15% compared to early 2023.

This shows both greater buyer confidence and more realism on pricing by sellers.

North East and London lead the way in sales

In the North East, the number of homes going under offer is up +17% on this time last year, while in London 16% more homes have sales agreed.

Across the UK as a whole, more properties are now coming to market, with 21% more sellers putting up their For Sale signs than this time last year.

This, in turn, is increasing the choice of homes available for buyers and supporting sales for sellers.

Our Executive Director of Research, Richard Donnell, says: ‘The housing market has proved very resilient to higher mortgage rates and cost of living pressures.

‘More sales and more sellers shows growing confidence among households and evidence that 4-5% mortgage rates are not a barrier to improving market conditions.’

Are sellers still reducing their prices?

‘While increased activity levels are welcome news, it’s important to note that a small proportion of sellers continue to reduce asking prices to attract buyer interest,’ says Donnell.

However, sellers will be pleased to learn that fewer price reductions are now taking place, compared with this time last year.

Reductions are still above average right now, as higher mortgage rates continue to make buyers price sensitive, but discounts of 5% or more are mainly taking place in the South East and East of England.

What will happen to house prices in 2024?

‘There is clear demand from homeowners and first-time buyers looking to move and buy their first home in 2024,’ says Donnell.

‘This is going to support higher sales volumes, but we don’t expect higher house price growth.

‘The reality is that the housing market is still adjusting to higher mortgage rates and the impact of reduced buying power, which has varied across the country.’

This means that sellers will need to remain realistic on pricing, but the fact that their home is likely to attract more interest is good news, as it increases the chances of agreeing a sale.

‘The average estate agent is agreeing 6 new sales a month, up from 5.2 a year ago, which proves that house prices don’t need to fall to support sales,’ says Donnell.

This is feeding through into our UK house price index, which continues to record a slowdown in the rate of price falls.

Annual house price inflation is currently -0.5%, up from the recent low of -1.4% recorded in October 2023. And house prices are now 1.5% below their peak of £268,000 in October 2022.

What’s going to happen to mortgage rates in 2024?

Mortgage rates have fallen back to where they were a year ago, but they remain above 4% and are likely to plateau at this point for the foreseeable.

‘Mortgage rates could move a little lower over the year, but this hinges on the timing of future base rate cuts, which may come later in the year,’ says Donnell.

Falling mortgage rates are important when it comes to boosting housing market activity, but lenders have recently been pulling mortgage deals below 4%.

‘The cost of finance used to fund mortgages has increased modestly in recent weeks,’ says Donnell. ‘Rising incomes are helping to offset the impact of higher borrowing cost, but at a slow pace.

‘Buyers should anticipate 4-5% mortgage rates over much of 2024. But our consistently held view is that 5% mortgage rates are the tipping point for annual house price falls.

‘Mortgage rates over 6% for a sustained period would lead to larger double-digit price falls. Mortgage rates in the 4-5% range are consistent with flat to low single digit price rises.’

Will the Budget have anything in store for sellers?

‘We don’t expect the Budget to have any specific measures that will boost market activity in the very short term,’ says Donnell.

‘There is a case to make permanent stamp duty changes for first-time buyers from the 2022 autumn budget.

‘But any longer-term measures such as the Mortgage Guarantee Scheme or small deposit mortgages will take longer to impact market activity, with much depending on the scale of the proposals.’

Key takeaways

  • Demand rises 11% and sales agreed are 15% higher than a year ago
  • Sellers make a return with 20% more homes for sale than this time last year
  • Activity is being boosted by falling mortgage rates, which are now plateauing
  • We expect to see more sales in 2024, rather than faster price growth