Speculation over possible tax changes in the Budget is likely to support the growth in homes listed on the market, with investors, second home owners and others with multiple homes consider selling.
Zoopla reports that 32% of homes for sale on its site are ‘chain-free’ Outside London, two-bed flats are most likely to be chain-free; while in London two- and three- bed houses are likely to be chain-free.
Higher mortgage rates have forced some landlords into selling, with 13% of homes for sale being previously rented. Most of these (53%) are in London and the South East, where modest yields, higher mortgage rates and low house price growth impacted returns for investors over recent years.
Looking ahead, many English councils are planning to double council tax for second homes from next year. Coastal and rural postal areas including Truro, Torquay, Exeter, Lincoln and Bournemouth have all seen available supply increase by over 40% , which is partly a result of tax changes. A
Annual house price growth is negative in these areas, with rising supply keeping prices in check.
Meanwhile the property website says current mortgage rates – the lowest for 15 months – are supporting a rebound in sales activity across the UK.
Sales agreed and buyer demand are both up by more than a quarter over the last four weeks compared to the same period a year ago as households that have held off making moving decisions over the last two years return to the market. The number of sales agreed is 25% higher than a year ago.
Sales are up by over 10% across all areas and are up to 30% higher across the East Midlands and North-East.
The number of homes for sale continues to grow as greater confidence amongst sellers sees more homes listed for sale – this includes homeowners looking to move as mortgage rates fall but also investors and second home owners selling in response to recent and possible tax changes.
But Zoopla also cautions that while market conditions are improving, setting the right price is important to attract buyers.
The same applies to the fifth of homes for sale that have been on the market for more than six months, still unsold. This explains why a similar proportion have had their asking price cut by up to 5% to attract buyers who remain price sensitive in the face of greater choice.
Over a third of sales (37%) are being agreed at more than 5% below the initial asking price, highlighting further how buyers continue to be competitive with offers. This proportion has improved from a year ago but remains at a level that suggests low single digit house price growth ahead.
“Lower mortgage rates are delivering a much needed confidence boost to homeowners, many of whom have sat on the sidelines over the last two years. Market activity is up across the board and expectations of lower borrowing costs will continue to bring buyers and sellers into the market” says Zoopla executive director Richard Donnell.
“Speculation over possible tax changes in the Budget and the impact of previous tax changes are continuing to add to the growth in the number of homes for sale. We remain in a buyers market and greater choice of homes for sale will keep house price inflation in check into 2025.“
