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Evidence that a recovery is underway in the UK housing market has been reinforced by data suggesting that the number of agreed sales jumped in the first two months of the year.
The number of “contract sales” – those agreed between buyer and seller but not yet completed – rose in February by 23 per cent compared to the same month last year. Agreed sales were 9 per cent higher than in February 2019, the last year in which the housing market was not affected by the fallout from the pandemic and the “mini-budget”.
UK-wide research from property data provider TwentyCi showed that 86,000 sales were agreed in January, which was 23 per cent higher than the level in January 2023, and 0.9 per cent higher than in 2019.
“The market looks very strong, despite all the naysayers,” said Colin Bradshaw, CEO of TwentyCi.
Last year, operators of mortgaged homes faced sharp rises in mortgage interest payments as a result of rising Bank of England base rates and higher swap rates, impacting the cost of lenders' fixed-rate deals. This has impacted demand, with agreed sales falling by 12 per cent between 2022 and 2023, TwentyCi said.
Mortgage rates have retreated from their highs in 2023, allowing more buyers to consider purchasing. Mortgage approvals were 55,000 in January 2024, up from 44,000 in September 2023. The Nationwide Home Price Index for February recorded its first annual rise in home prices since January 2023, with prices rising 1.2 per cent over the year.
Bradshaw warned that many homeowners have not yet experienced the shock of rising mortgage rates, as their old fixed-rate contracts expired and they needed to refinance under new terms. The UK's industry body, Finance, has estimated that around 1.6 million fixed-price deals will expire over the course of 2024.
Rates fell from 6.39 percent on average for two-year fixed deals to 5.8 percent this week, according to data provider Moneyfacts. However, in July 2022, the average rate stood at 2.65 per cent, underscoring the challenge facing borrowers looking to remortgage.
Zoopla's latest report on the housing market added evidence of the market's recovery, with sales up 15 per cent from this time last year, and the stock of homes available to buy up 21 per cent. The real estate website predicts that 1.1 million homes will be sold in 2024, up 10 percent from last year's total.
This positive outlook follows a more pessimistic market mood last year, as borrowers worried about mortgage interest rates, inflation and expectations of a sharp decline in house prices. In fact, Richard Donnell, research director at Zoopla, said, “The housing market has proven very resilient in the face of rising mortgage rates and cost of living pressures.”
