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Boost in buyer demand as mortgage rates fall

Couple looking at a property advert in the window of an estate agents

There are positive signs for the UK property market at the start of 2024, with more buyers and more properties being listed for sale.

Research by Zoopla shows that demand in the first week of January was more than 10% ahead of the same period a year ago. The increase was greatest in London and the South East, where house prices have risen more slowly over recent years compared with the rest of the UK, helping to improve affordability.

Meanwhile, the flow of homes listed for sale is up 22% compared with a year ago, boosting choice for buyers and keeping prices in check. The average estate agent currently has 28 homes for sale.

Start of the year 'particularly strong' for sales

February is a good time to put your house up for sale, with homes listed in the shortest month typically having the best chance of finding a buyer and finding a buyer more quickly, according to a new analysis by Rightmove, which looked at millions of properties listed for sale since 2012.

"The best time to get moving is the time that's right for you -- we can't always plan or predict when a life move is needed," said Rightmove property expert Tim Bannister. "However, for those who are able to be a bit more flexible about when they decide to sell, the data shows typically the start of the year has been particularly strong. It's also when we've historically seen the most buyers sending enquiries to agents, so it's a great time for those looking to sell to make sure they are listed, their marketing is strong and they're pricing attractively enough against other sellers."

Monthly increase in house prices

Across the UK, house prices fell last year -- but price falls are now slowing as more sales are being agreed.

In fact, the average cost of a home rose by 0.7% from December to January, according to the latest House Price Index from Nationwide. Buyers now pay an average of £257,656, up from £257,443 a month ago.

Prices were still down slightly compared to a year ago, but the annual decrease shrank from 1.8% in December to 0.2% in January.

It comes amid signs that affordability pressures are easing, with mortgage rates continuing to drop.

Average mortgage rates falling

In December, the average interest rate for new mortgage agreements fell for the first time in over two years, with a decline of 0.06 percentage points to 5.28%.

The figures from the Bank of England also show that net mortgage approvals for house purchases rose from 49,300 in November to 50,500 in December, and approvals for remortgaging with a different lender increased from 25,700 to 30,800.

'Room to negotiate on pricing'

Lower mortgage rates are expected to boost buyer demand and attract further interest in the market over the coming months, according to Zoopla's executive director of research, Richard Donnell.

"Buyers understand that there is more room to negotiate on pricing with sellers but many will also still need to sell a home to unlock their next move," Donnell said.

"Sellers will need to remain realistic over the value they expect to achieve from their property and be prepared to negotiate on price."

Posted by Fidelius on February 5th 2024

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