Zoopla: Don’t get carried away by New Year sales bounce
Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the Zoopla House Price Index, warning not to get carried away by New Year sales bounce.
Key points from publication:
- House prices are down 0.8% in a year.
- Buyer demand is up 12% and sales agreed up 13%.
- The supply of homes is 22% higher.
- Buyers are driving a hard bargain – a fifth of sellers are accepting an offer of 10% below asking price.
Sarah Coles says:
“The arrival of a new year, along with a clutch of cheaper mortgages, breathed some life back into the property market.
“Sellers and buyers rejoined the property hunt, and homes started to shift again.
“There are some real positives for sellers to take comfort from, but they can’t afford to get carried away.
“In early December, we saw the average two-year fixed-rate mortgage fall below 6%, according to Moneyfacts, and since then they have continued their march south, so the average is now only a little over 5.5%.
“The emergence of more affordable deals was just what some buyers were waiting for.
“We saw an uptick in the number of people hunting for a property, bringing real hope for those who have stuck it out in such a stagnant market.
“This is a real positive, but sellers shouldn’t get carried away.
“We also saw a flood of properties onto the market, so buyers can still afford to be choosy.
“It means homes have to be priced realistically and sellers should still be prepared to accept an offer.
“At the moment, a fifth of sellers are accepting an offer of 10% below asking price.
“Overall, this is helping depress prices, which are still lower than they were a year earlier.
“Looking further ahead, fixed-rate mortgages are expected to get even cheaper, and variable rates should follow suit once the Bank of England starts cutting rates.
“However, mortgages are just part of the picture. An awful lot depends on the financial position households find themselves in too.
“With the UK economy teetering on the brink of recession, the property market may not be out of the woods yet, and this might not be the last of the price falls we see in 2024.
“It’s worth bearing in mind that property price falls aren’t just an issue for buyers and sellers, The HL Savings & Resilience Barometer shows that all homeowners will pay a price.
“For those with small deposits, there’s the immediate risk of negative equity, which can be a nightmare for anyone forced to sell up.
“For those with a bigger chunk of equity in their property, the erosion of that equity still makes a remortgage harder and more expensive.
“And for older homeowners, falling house prices also take a toll on our resilience in retirement, because it could leave you paying a mortgage for longer, or eroding the value of the asset you may need to draw on later in your retirement.”
Kindly shared by Hargreaves Lansdown