UK Housing Market Set for Price Increases Amid Growing Confidence

House prices in the UK are projected to rise by 2% by the end of 2024, as the housing market shows signs of recovery, according to a forecast by property portal Zoopla. The anticipated increase is attributed to a surge in the number of homes for sale, which has led to buyers paying an average of 96.8% of the asking price—the highest level in 18 months. Richard Donnell, Zoopla’s executive director, noted that the market is gaining momentum after a sluggish 2023, with increased confidence among both buyers and sellers. Despite the positive outlook, Donnell cautioned that house price inflation will be moderated by the influx of new listings and ongoing affordability challenges, particularly in southern England. He emphasized that the recent king's speech and government plans are unlikely to significantly influence the housing market in the next 12 to 18 months. Instead, he highlighted the Bank of England's monetary policy as a more critical factor, with expectations of a base-rate cut before the end of 2024. Simon Gerrard, a former president of the National Association of Estate Agents, echoed this sentiment, suggesting that steady inflation at the Bank's target of 2% could lead to a reduction in interest rates as early as August or September. This potential shift may reignite property searches that have been stalled due to higher mortgage costs since interest rates began rising in 2022. While house prices have seen only a modest increase of 0.1% over the past year, they have risen across all UK regions in the first half of 2024, as many prospective buyers seek larger homes to accommodate growing families.