Confidence is growing in the UK property market as both buyers and sellers take action, with the North West continuing to stand out for its fast-growing market.
The latest Zoopla House Price Index has revealed another positive month for the UK property market as it continues to demonstrate strength and stability, along with a greater level of buyer confidence compared with last year.
Its index found that the average house price has increased by 2% year-on-year, while sales volumes were boosted by 12%, which was the fastest rate of growth seen in two years. This was accompanied by a 13% rise in buyer demand, demonstrating a jump in appetite for UK property among buyers and investors.
The number of homes for sale is also up by 10% compared with this time last year, making it the strongest January in seven years with an average of 31 properties for sale per estate agent branch.
Positive sentiment for UK property
Zoopla’s study also found that, despite concerns that upcoming stamp duty changes combined with less downward movement than expected in the mortgage market could dampen UK property appetite, in fact buyer sentiment was relatively undeterred by the headwinds.
The portal’s consumer tracker showed that there were now more renters and homeowners looking to buy or move in the next two years than there were a year ago; with 17% of homeowners looking to move now or in the next two years.
The proportion of homeowners with no plans to move but who intend to watch the market has risen from 21% to 25%, while the number of current renters who are looking to buy now or in the next two years has increased from 18% to 22%.
North West wins out
Underpinning the growing momentum in the UK property market is wage growth, which has been rising at a faster rate than house prices. Zoopla’s report notes that annual earnings growth is more than 5%, boosting affordability in many segments of the market.
However, with affordability still being one of the key considerations in the current climate due to higher mortgage rates and cost of living difficulties, the more expensive markets are the ones that tend to see the lowest growth. Demand in these locations peters out when there are financial constraints, boosting appetite in more affordable areas.
Looking at England specifically, the North West continues to record the fastest house price rises, with a 3.2% annual jump in the latest figures. The region has been ahead of most others in England for some time, with separate market outlooks expecting it to remain this way.
The report states: “The North West of England, Scotland and Northern Ireland have recorded faster employment growth over the last 2 years than the regions of southern England. Locally, prices are rising the fastest in Wigan in the North West (5.6%) and Motherwell in Scotland (4.9%).”
Meanwhile, southern parts of the country have seen the lowest rates of house price inflation, according to Zoopla, of below 1.5%. However, with a recent increase in first-time buyer demand in London and the South East, the property portal expects more “near-term price inflation” in these areas.
Speeding up ahead of stamp duty change?
The UK property market is widely expected to continue to accelerate ahead of the upcoming stamp duty adjustment in April, as buyers try to get their transactions over the line ahead of the changes. However, Zoopla notes that the new stamp duty threshold is not actually expected to have a major impact on market activity overall.
As ever, the UK property market remains a strong asset class and a stable option for buyers thanks to its positive fundamentals, with supply continuing to fall short of demand, and an improving economic outlook boosting prospects further.
Toby Leek, President of NAEA Propertymark, said: “With the average house price higher than what was achieved last year, coupled with the fact that more buyers are looking to move home, now is a great time to consider putting your house on the market. Propertymark member agents reported that the number of new buyers registered per branch has on average increased year on year by 44%.
“The Stamp Duty changes due to commence in England and Northern Ireland from April are having the expected effect of high activity due to many people wanting to save themselves potentially thousands on their next home move.”
Malcolm Prescott, managing director of Webbers Estate Agents, said: “Fundamentally the UK property market thrives on confidence and positive sentiment and whilst we have had to endure negative press for a while we are now seeing customers positively embracing property hearing that prices are set to rise, albeit marginally (4/6%) and affordability seems to be back given the more consistent mortgage interest rates.