In December 2023, the UK real estate market displayed unexpectedly strong activity. According to data from Zoopla, a leading UK property information portal, newly signed housing sales agreements increased by 17% year-on-year, surpassing market expectations. This significant growth highlights the robust performance of the real estate market and the active participation of buyers.
Furthermore, Zoopla's house price index indicated a 19% year-on-year increase in buyer demand in December, occurring against the backdrop of rising mortgage interest rates, showcasing the market's strong adaptability to these changes.
Facing rising mortgage interest rates, the increase in available homes for sale provided buyers with more choices and boosted sales activity. Additionally, the alignment between buyers and sellers on pricing positively contributed to sales growth.
Zoopla's analysis suggests that cash buyers became a crucial support for property market demand in 2023, with cash buyers expected to account for one-third of this year's total home sales. Moreover, due to steady growth in average incomes and the implementation of stringent mortgage affordability tests for new mortgage applicants, house prices did not experience the significant declines expected by many.
This trend continued from December 2023 into the first week of 2024. According to Zoopla's statistics, buyer demand in the first week of January increased by 14% compared to the same period in early 2023, while newly agreed upon sales increased by 16%.
Supply also saw a traditional early-year rebound, occurring earlier than usual. Exciting new property listings were unveiled on Boxing Day, with over 11,500 properties listed on December 26th. Zoopla noted, "The overall improvement in market sentiment is expected to continue into the spring, as declining mortgage interest rates will continue to attract new buyers to the market."
In addition to the growth in buyer demand, according to data from the UK's Office for National Statistics, the average UK rent increased by 6.2% year-on-year in 2023, reaching its highest level on record.
The rapid growth in rents has stimulated first-time buyers, with rent increases over the past three years surpassing monthly mortgage repayments. Consumer surveys indicate that 40% of prospective homebuyers intend to purchase their first home within the next two years. The resilience of house prices has provided them with increased confidence and motivation.
Despite facing higher mortgage interest rates in 2023, UK house prices did not exhibit negative performance; instead, they continued to rebound.
According to the latest data from Halifax, UK house prices rose for the second consecutive month in November, with an increase of 0.5%. Kim Kinnaird, Director of Halifax Mortgages, stated, "In 2023, despite facing economic pressures, property prices performed better than expected." He also believes, "House prices in 2023 will continue to be supported by a shortage of housing supply."
Looking ahead to 2024, while house prices are not expected to skyrocket as they did during the pandemic, some institutions predict that prices will remain resilient due to the current supply-demand imbalance and prospects for interest rate cuts. Currently, the average UK house price stands at £258,557, although lower than the summer peak of £273,751 in 2022, it remains higher than the £215,295 at the end of 2019.
