Homes for sale in UK are 8% over-valued, claims Zoopla

Portal says otherwise market is looking good with a 19% more homes for sale than a year ago, new sales agreed 8% higher and demand up 6%.

A young family with a buggy are pictured looking into a London estate agent window looking for a property to buy.

UK house prices are on track to be 1.5% higher by the end of 2024 as incomes growth begins to ease the impact of higher mortgage rates, Zoopla’s latest House Price Index is forecasting.

The portal says that homebuyers are largely shrugging off the election with a fifth (19%) more homes for sale than a year ago, new sales agreed 8% higher and demand up 6%.

SUMMER SLOWDOWN

And in signs of a Summer slowdown sales agreed are down slightly month on month across all regions, led by the North East (-6%) and West Midlands (-5%).

In the run up to the global financial crisis in 2007 house prices were more than 50% over-valued and even more over-priced in the late 1980s housing boom which led to double digit price falls.

Graph showing past and expected house price values Zoopla June 2024

But Zoopla’s latest analysis reveals UK house prices are estimated to be 8% over-valued but by the end of the year this will disappear assuming that house prices rise 1.5% and mortgage rates remain at 4.5%.

Richard Donnell, Zoopla
Richard Donnell, Executive Director, Zoopla

Richard Donnell, Executive Director at Zoopla, says: “The housing market continues to adjust to higher borrowing costs through modest house price falls and rising incomes.

“The general election campaign has had a limited impact on market activity although the seasonal summer slowdown is arriving.”

He adds: “Sales agreed continued to increase and more homes for sale means more buyers looking to move in the second half of the year.

“The timing of the first cut in the base rate is a key moment and will give a boost to both market sentiment and sales activity. Overall we expect house prices to be 1.5% higher over 2024”

MORE ACTIVE
Guy Gittins, Foxtons
Guy Gittins, Chief Executive, Foxtons

Foxtons Chief Executive Guy Gittins says: “With forecast house price rises now roughly in line with current inflation rates, it’s still very clear that property ownership is high on the agenda for hundreds of thousands of people across the UK.

“In London, the market is considerably more active today than last year and crucially, aspiring property owners and sellers are undeterred by the looming election.

“Historically, when we see this as a trend, it continues to deliver a strong market post-election. With people’s confidence high after the summer, and an expected interest rate cut, the market could be very busy through to the end of the year.”

Surged
Anna Ward, Associate in the Residential Research team at Knight Frank
Anna Ward, Knight Frank

Anna Ward, Associate in Residential Development Research at Knight Frank, adds: “House prices have surged by around 20% since the last election in December 2019, making affordability a hot political issue ahead of the July 4th general election.

“Both sides have promised to ramp up housebuilding if elected, but their pledges of 1.5 or 1.6 million homes will be hard to achieve based on current supply indicators. Planning permissions for new homes across England dropped to their lowest level in almost a decade over the 12 months to Q1, according to new figures from the Home Builders Federation.”

CONFIDENCE RETURNING
emerson
Nathan Emerson, Chief Executive, Propertymark

And Nathan Emerson, Chief Executive of Propertymark, adds: “It’s been a positive year so far for the housing market and it’s extremely upbeat to see confidence returning, despite some of the challenges people have faced such as high inflation and interest rates.

“With the General Election now less than a week away, we are keen to see any incoming government lay down their full plans to further support current homeowners on aspects such as energy efficiency, but also to fully get behind key groups like first-time buyers as they set out on their property journey.”


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