New home sales jump 17% as buyer demand improves, says Zoopla

The decline in house prices has started to flow as buyers and sellers become more aligned on pricing, according to online property platform Zoopla on Friday, which revealed that the number of new house sales were up 17% year-on-year in November.

The annual improvement comes while buyer demand has also risen 19%, Zoopla said, as the increase in the number of homes available for sale – up 25% on last November – is "boosting choice and supporting sales".

The market has been propped up by cash buyers who are on track to account for 30% of all house sales in 2023, while the number of mortgaged sales has plummeted by 30% due to the impact of higher interest rates.

Lenders are stepping up their stress-testing of buyers, restricting the number of mortgages granted at 4.5 times or more of a borrower's salary – these loans accounted for just 15% of all mortgages this year.

Rates have come down, with the average mortgage rate for a five-year fixed deal falling from a peak of 6% to the current 4.74% level for those with a 25% deposit. But borrowers are now having to prove that they can afford repayments in the event that rates rise to 9%, up from 6-7% back in 2021 when mortgage rates were down at 1-2%.

Nevertheless, wages have continued to rise which has helped boost buyer confidence, Zoopla said.

"This regulatory constraint on buying power is one reason we believe house prices are unlikely to rise in 2024, even as base rates start to fall later in the year," said Zoopla's executive director of research Richard Donnell.

"We expect the steady momentum in new sales that has developed over the final part of 2023 to continue into early 2024. While mortgage rates are edging lower, affordability remains a key challenge for mortgage-reliant households who are making home moving decisions," Donnell said.

He said that sales volumes are expected to hold steady at 1m sales completions in 2024, but house prices will drift 2% lower.