Zoopla’s House Price Index Report: October 2024

Adapted from a Zoopla article 3 October 2024 by Richard Donnell, Executive Director - Research

Mortgage rates drop to lowest rates seen in 15 months as house prices rise and more homes are sold.

Key takeaways

• Lowest mortgage rates for 15 months boost sales market activity
• Buyer demand and sales agreed up 25% since 2023
• Buyers remain price-sensitive, keeping price rises in check
• Average UK house price rises almost 1% in a year
• In affordable areas, house prices rise 2.5%

Almost a third of homes for sale are ‘chain-free’ as investors and second home owners sell in the face of recent and possible tax changes. Some coastal and rural areas see supply of homes for sale up 40% on last year. The outlook is for modest price growth and steady growth in sales

The average house price in the UK is £267,100 as of August 2024 (published in October 2024).

Property prices are now at 0.7% inflation compared to a year ago. However, the average UK house price is set to rise by 2.5% by the end of the year.

Double-digit growth in sales market activity

Home buyers are benefitting from the lowest average mortgage rates for 15 months, which is supporting double-digit growth in all key measures of sales market activity. Annual house price inflation is positive, but remains below 1%.

Nationally, home buyer demand is up 26% on this time last year, as more homes are listed for sale and sellers look for somewhere new to buy. The average mortgage rate for a new 5-year 75% LTV loan is 4.3%, compared to 5.5% a year ago, the lowest since May 2023. Intense competition among lenders is keeping rates attractive for buyers, especially for those with larger amounts of equity.

The number of sales agreed is now 25% higher than a year ago as households that have held off making moving decisions over the last 2 years return to the market. Sales are up by over 10% across the UK.

Increased sales activity is supporting modest price rises, rather than causing any acceleration in home values.

Across all other areas of Great Britain, house price growth is higher than a year ago, with prices up to 2.5% higher.

More supply will keep price inflation in check

Rising sales volumes are being supported by more homes available for sale, up 12% on this time last year.

Many of these homes are new listings from home owners looking to sell and buy another home. However, not all homes are ‘brand new’ to the market and a fifth of homes currently for sale were previously on the market over the last two years.

While market conditions are improving, setting the right price is important to attract buyers. The same applies to the fifth of homes for sale that have been on the market for more than 6 months, still unsold.

This explains why a similar proportion have had their asking price cut by 5% or more to attract buyers. These trends show buyers remain price-sensitive as choice improves and sellers need to price sensibly to agree a sale.

Tax change speculation boosts supply

Speculation over possible tax changes in the Budget is likely to support the growth in supply with investors, second home owners and others with multiple homes considering selling.  Nearly a third (32%) of homes for sale on Zoopla are ‘chain-free’.

Higher mortgage rates have forced some landlords into selling, with 13% of homes for sale being previously rented. Most of these (53%) are in London and the South East, where modest yields, higher mortgage rates and low house price growth impacted returns for investors over recent years.

Rising sales volumes and modest house price inflation are positive for the housing market.

There are sufficient levels of market activity to keep drawing in new buyers who are prepared to make sensible offers on competitively-priced homes.  Sellers remain keen to get the best price for their home to unlock their next move, but buyers remain price-sensitive and have a greater choice of homes to buy.  While sales prices have firmed, Zoopla find that almost 2 in 5 sales (37%) are agreed at more than 5% below the initial asking price.

Housing market outlook

The housing market continues to adjust to higher borrowing costs through low house price growth and a steady recovery in sales.

Expectations of lower mortgage rates are a real attraction for would-be movers, with some lenders offering mortgage rates below 4%. 

The outlook for interest rates is far from certain though, considering global events. Today’s ‘fixed’ mortgage rates already reflect the extent to which financial markets expect UK interest rates to move lower in the next 2-5 years.

Zoopla’s view is that mortgage rates will settle in the high 3% and low 4%s into 2025, meaning a modest improvement in borrowing costs over the coming months.

Together with rising household incomes, every little helps to improve affordability for home buyers and these will continue to support sales volumes and a steady recovery of prices. 

The outlook is more positive than it was a year ago, but sellers need to manage their expectations on pricing if they are serious about agreeing a sale in a timely manner.

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