UK Housing Market Signaling Revival as Deals Jump, Zoopla Says

The UK housing market is showing signs of a rebound from last year’s slump, and a possible interest-rate reduction by the Bank of England could boost the confidence of prospective buyers, according to a report by property portal Zoopla.

Agreed sales in the four weeks to July 21 rose 16% from a year earlier, while the average agent had 33 homes available for sale, the most in six years, the data showed. That suggests sellers are optimistic of getting a good deal. While property prices increased just 0.1% in the past 12 months, Zoopla expects a slow but steady recovery, with an average increase of 2% by the end of the year.

Sales in the first half of 2024 were stronger than in 2023 and the pre-pandemic years, the portal’s long-run index of weekly sales showed. Prices ticked up slowly across all regions of the UK, reversing declines recorded over 2023, Zoopla said. 

This is supported by separate data from the nation’s central bank this week, which showed that mortgage approvals held steady near the strongest level in 1 1/2 years in June. Still, mortgage rates near a 15-year high continue to damp demand, especially in southern England. 

House sales remain on track for 1.1 million in 2024, Zoopla said, but that’s still 10% lower than the 20-year average.

The projected 2% increase in home prices by the end of 2024 can partly be attributed to an acute housing shortage — an issue the newly elected Labour government has promised to fix through an overhaul of the country’s convoluted planning system. Labour has pledged to build 1.5 million homes over five years.

However, given the time needed for the required changes to take effect, the new government will have “no material impact” on the housing market in the next 12-18 months, Zoopla said. 

The BOE’s decision when policymakers meet on Aug. 1 will be more crucial, said Richard Donnell, executive director at Zoopla. Economists are split on whether the monetary authority will deliver its first rate reduction since the pandemic.

“Government policies focused on economic growth that feeds into income growth will help support both home buyers and renters,” said Donnell. “The Bank of England will have more impact on the market in the short term and much depends on the timing of the first base rate cut.”

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