The UK housing market is showing signs of a rebound from last year’s slump, with a possible interest-rate reduction by the Bank of England potentially boosting confidence among 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, with the average agent having 33 homes available for sale, the most in six years. This indicates that sellers are optimistic about getting a good deal. Although property prices have increased by just 0.1% over the past 12 months, Zoopla anticipates 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, according to Zoopla’s long-run index of weekly sales. Prices have slowly increased across all regions of the UK, reversing the declines recorded in 2023.
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Supporting this trend, separate data from the nation’s central bank showed that mortgage approvals held steady near the strongest level in 1 1/2 years in June. However, mortgage rates near a 15-year high continue to dampen demand, particularly in southern England.
House sales are projected to reach 1.1 million in 2024, which is still 10% lower than the 20-year average, according to Zoopla. The expected 2% increase in home prices by the end of 2024 can be partly attributed to an acute housing shortage. The newly elected Labour government has promised to address this issue by overhauling the country’s convoluted planning system and pledging to build 1.5 million homes over five years.
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However, given the time needed for the required changes to take effect, Zoopla stated that the new government will have “no material impact” on the housing market in the next 12-18 months. The Bank of England’s decision when policymakers meet on Aug. 1 will be more crucial, according to Richard Donnell, executive director at Zoopla. Economists are divided on whether the monetary authority will deliver its first rate reduction since the pandemic.
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“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.”