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Evidence that a recovery is under way in the UK housing market has been bolstered by data suggesting the number of agreed sales jumped in the first two months of the year.
The number of “sales subject to contract” — those agreed between buyer and seller but yet to be completed — rose in February by 23 per cent compared with 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 unaffected by fallout from the pandemic and the “mini-Budget”.
The UK-wide research from property data provider TwentyCi showed 86,000 sales were agreed in January, which was 23 per cent above the level in January 2023, and 0.9 per cent above the 2019 month.
Colin Bradshaw, chief executive of TwentyCi, said: “The market is looking pretty robust, in spite of all the naysayers.”
Last year, mortgaged home movers faced sharp rises in mortgage interest payments as a result of higher Bank of England base rates and higher swap rates, which influence the cost of lenders’ fixed-rate deals. This weighed on demand, with sales agreed falling by 12 per cent between 2022 and 2023, TwentyCi said.
Mortgage rates have eased from their 2023 highs, allowing more buyers to consider a purchase. Mortgage approvals hit 55,000 in January 2024, up from 44,000 in September 2023. Nationwide’s house price index for February recorded its first annual rise in house prices since January 2023, with prices up 1.2 per cent over the year.
Bradshaw cautioned that many homeowners had yet to face the shock of higher mortgage rates, as their old fixed-rate deals expired and required refinancing under new terms. UK Finance, the industry body, has estimated that about 1.6mn fixed-rate deals will end over the course of 2024.
Rates have fallen from 6.39 per cent on average for two-year fixed deals to 5.8 per cent this week, according to data provider Moneyfacts. However, in July 2022 the average rate was 2.65 per cent, underlining the challenge facing borrowers looking to remortgage.
Zoopla’s recent housing market report added to evidence of a market recovery, with sales agreed 15 per cent higher than this time last year and the stock of homes available to buy up by 21 per cent. The property site forecasts that 1.1mn homes will be sold in 2024, up 10 per cent on last year’s total.
The positive outlook follows a much more downbeat mood in the market last year, as borrowers worried about mortgage rates, inflation and predictions of a sharp fall in house prices. In fact, said Richard Donnell, Zoopla research director, “the housing market has proved very resilient to higher mortgage rates and cost of living pressures.”
