Zoopla’s latest data shows demand from home buyers has rebounded in the first two months of 2023 but remains at half the level recorded a year ago. New sales volumes in early 2023 have also recovered, tracking the usual seasonal upturn seen each year, albeit 24% lower than this time last year.
Current market conditions are more aligned with the pre-pandemic years with demand 8% higher and sales agreed up 1%. It seems that the frothy market conditions of the pandemic years are well and truly behind us.
Supply returns to normal levels, boosting choice
Slower sales and a steady flow of new supply have boosted the stock of homes for sale by over 60% compared to last year. This creates more choice for home buyers who now have more room to negotiate on price. It also helps reduce the upward pressure on house prices.
The housing market is adjusting to higher mortgage rates better than many had feared and it is welcome news to see more rates for new buyers now in the 4-5% range and even lower. Mort-gage rates are unlikely to get much cheaper but competition among lenders will remain strong and keep deals attractive for borrowers. Zoopla’s view has always been that 4% mortgage rates are manageable and consistent with very low levels of house price growth or price falls in real terms.
Working from home, increased retirement, and high immigration all continue to stimulate demand to move home. Cost-of- living pressures exacerbate those needs for some. Zoopla is ex-pecting the market to deliver 1m to 1.1m sales in 2023.