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Home gross sales surge as mortgage charges fall

The variety of agreed property gross sales to date this month is 13 per cent greater than a yr in the past as falling mortgage prices encourage consumers and sellers again to the market, in keeping with a brand new evaluation.

The Zoopla home worth index, launched this morning, discovered a considerably extra buoyant image for the UK property market within the first three weeks of January in contrast with a yr earlier.

Whereas gross sales volumes elevated all over the place throughout this era, the most important rise was present in Yorkshire and the Humber, which was up 19 per cent year-on-year, adopted by the West Midlands, at 17 per cent, the South West at 14 per cent, then Scotland and London (each 13 per cent) and Wales (12 per cent). The smallest rises have been within the North East and North West (each 3 per cent).

In addition to an increase in gross sales, the property web site reported that the availability of houses on the market available on the market was 22 per cent greater than a yr in the past, as sellers who withdrew properties — or did not record them — in the course of the mortgage-induced slowdown of 2023 determined to place them again on.

The surge in purchaser curiosity has been biggest in London, in keeping with Zoopla. It mentioned it had registered a 21 per cent improve in new purchaser demand within the capital within the first three weeks of January in contrast with final yr, the most important improve of any UK area, and nicely above the nationwide common of 12 per cent. Nonetheless, it cautioned that the value of properties in London would maintain the market again, with home costs nonetheless 13 occasions common earnings, albeit down from an all-time excessive of 15 occasions in 2016.

There may be rising optimism amongst potential consumers and sellers as mortgage rates of interest, which skyrocketed in 2023, start to fall persistently. Inflation was at 4 per cent within the yr to December — down from a excessive of 11.1 per cent in October 2022 and nicely under the Financial institution of England’s expectation of 4.6 per cent — whereas common mortgage charges have tumbled to their lowest ranges since early June, with some lenders chopping charges to beneath 4 per cent.

Richard Donnell, government director at Zoopla, warned that, regardless of the rise in property market exercise, costs would stay flat and the market would stay a “purchaser’s market” due to affordability constraints and comparatively excessive charges.

“The autumn in mortgage charges has led to a rebound in purchaser demand and gross sales following a weaker second half of 2023 when many movers put selections on maintain,” he mentioned.

“This enchancment in exercise will assist gross sales volumes which, at a million, reached an 11-year low in 2023. We don’t see these traits as a precursor to greater costs in 2024 because it stays a purchaser’s market. Sellers trying to transfer ought to be inspired by these early alerts of exercise, however consumers stay worth delicate and centered on worth for cash. Over-optimism by sellers might shortly stall the present enchancment in market exercise.”

Tom Invoice, head of UK residential analysis at Knight Frank, which predicts UK costs will rise by 3 per cent in 2024, warned that political uncertainty throughout a common election yr might nonetheless sluggish the market by making consumers and sellers extra cautious.