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UK property sales activity at highest level since post-Covid boom

The UK property market is enjoying the largest sales pipeline for four years amid an improving economic outlook and falling mortgage rates.

The number of sales agreed was 25% higher this month compared with October 2023, while buyer demand is 22% up on last year, according to figures from Zoopla’s latest House Price Index.

The property portal has also registered a rise in the flow of new UK property supply, up by 13% on last October, with an 11% rise in the stock of homes for sale; both of which are boosting options for buyers, putting them in the driver’s seat.

UK house price inflation is now 1%, says Zoopla, with steeper price rises being held back by the boost in supply. However, as mortgage rates continue to fall, industry experts are forecasting a surge in prospective buyer numbers, which is likely to see house prices pushed up at a faster rate next year.

Richard Donnell, Executive Director – Research at Zoopla, said: “Housing market activity continues to recover in response to lower mortgage rates and rising incomes, with the largest sales pipeline for four years. House price inflation is being kept in check by a large supply of homes for sale and ongoing affordability constraints.”

UK property sales show strong buyer appetite

The steep annual rise in UK property market activity reflects a stronger urge from buyers to push ahead with their transactions than a year ago, when mortgage rates were on the rise and inflation was at a much higher level.

Earlier this month, inflation fell to below the government’s 2% target, while mortgage rates are now almost 1% lower than they were last year, all of which boosts buyer affordability – and is a big driver behind the growth in sales being completed. Rising incomes have also played a part, with wage growth surpassing house price growth.

As Zoopla points out, the sustained new sales growth of the past 12 months has resulted in the largest UK property sales pipeline since the post-pandemic rush that began towards the end of 2020, when sales began to ramp up after stalling earlier in the year.

There are now approximately 306,000 homes that have agreed a sale, moving towards completion, which is 62,000 (26%) more than a year ago. In terms of value of sale agreed homes in the pipeline, this now amounts to £113bn, which is 30% higher than in October 2023.

The report adds: “The momentum in new sales looks set to continue into December. Many recent sales will turn into as sales completions in H1 2025.”

Around a third (36%) of all buyers are now first-time buyers, while just less than this (31%) are existing homeowners buying with a mortgage. Cash buyers also make up a large proportion of the numbers (27%), which includes both homeowners with no borrowing and mortgage-free UK property investors.

Could the market be affected by the Budget?

There is some speculation that the upcoming Budget announcement this week could include stamp duty changes that could adversely affect first-time buyers. If this comes to fruition, the market could see a further surge in first-time buyers rushing to complete purchases of UK property before the changes come in, provided there is a grace period.

At the moment, first-time buyers are exempt from paying stamp duty on properties up to £425,000, meaning the vast majority (80%) of first-time buyers do not pay the tax. Those buying pricier properties up to £625,000 pay partial stamp duty, accounting for around 14% of buyers.

So, if the current thresholds are reduced back down to previous rates, a huge number of first-time buyers, which now make up a third of the market, could need to find some extra cash to get on the UK property ladder. This is likely to have more of an impact on buyers in the south of the country and London, while in the north and Midlands, where homes are cheaper, there may be less of an effect.

Zoopla’s outlook

The report concludes: “The housing market is adjusting to the step change in mortgage rates over the last 2 years. It is positive to see more sales activity, which reflects growing confidence amongst buyers and sellers, supported by rising incomes and mortgage rates in the lower 4% range.

“Our assumption remains that mortgage rates will remain close to current levels c4%-4.5% over 2025. This means wage growth will have to do the hard work supporting affordability and buying power with house price growth likely to remain modest. The market remains on track for a modest 2% price increase in 2024, with sales of 1.1m.

“The housing market is an extension of the economy, so we hope for a Budget that delivers economic growth and rising incomes alongside much needed investment to support the development of more homes.”

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