Three-tier housing market now operating

Zoopla’s latest market snapshot, used as a guide to capital appreciation by some landlords, says there’s now a three-tier housing market now firmly established.

It says the last 18 months have created notable variations in house price inflation in different areas, as higher mortgage rates and cost of living pressures have affected affordability.

1. Southern England regions: The East of England, South East and South west have seen the largest house price falls in the last year.The average home across these three regions is £344,000, which is 30 per cent above the UK average. Rising mortgage rates and reduced household buying power have hit these higher-priced markets harder than more affordable places. However, price falls in these regions are now starting to moderate as the market rebalances to higher mortgage rates.

2. London: The capital’s housing market is different to the rest of Southern England. It’s the most expensive place to buy a house in the country with an average price of £523,400 - almost twice the UK average. However, house price growth has been weak over the last seven years, and this has gradually improved affordability and opened the market to more buyers than before this. London’s house prices are rebounding faster than the wider Southern regions, explained by an uplift in demand and lower growth in the supply of homes for sale in the capital (seven per cent in London vs 21 per cent in the South).

3. The rest of the UK: While house price growth has slowed rapidly across the rest of the UK in the last 12 months, there have not been many instances of falling house prices. Average house prices are 28 per cent below the UK average, which means high mortgage rates have had less of an impact on market activity and house prices than in the South of England and London.

Zoopla research director Richard Donnell says: “The housing market is still adjusting to higher mortgage rates and reduced buying power, the impact of which has varied across the country. If you’re planning to sell your home this year, remain realistic on pricing and celebrate the fact that your home is likely to attract more buyer interest now than last year. This increases the likelihood of a successful sale.

“If you’re planning to buy a home, expect mortgage rates to remain within the four to five per cent range. They could move a little lower over the year, but this hinges on the Bank Rate and if (and when) it’s cut later in the year.

“Momentum in the sales market has been building over the last five months. I believe the housing market is on track for 10 per cent more sales in 2024 than in 2023, totalling 1.1 million, as greater supply boosts the potential for more sales.”

Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.