The UK property market is showing renewed vigor, with transaction numbers on the rise, even as house price trends remain divided across regions. According to Zoopla’s latest House Price Index, sales agreed in the housing market increased by 12% year-on-year, signaling growing confidence and activity. However, house prices have stayed relatively static, with the national average dipping just 0.2% compared to last year.

A Market on the Move

Zoopla’s report highlights a shift toward a more balanced housing market, where supply and demand are better aligned than in recent years. This equilibrium has spurred growth in transactions, viewings, and buyer interest.

Despite the unchanged national house prices, the figures reflect an optimistic market outlook. Compared to March 2023, the average UK house price has dropped by a modest £410, a minor adjustment in the context of significant gains over the past two years.

The North-South Divide in House Prices

Regional disparities are shaping the property market, with stark contrasts between the north and south of England. Zoopla’s data shows that five southern regions, including the East Midlands, have experienced the steepest declines in house prices. Conversely, northern regions such as the North West, North East, and Yorkshire and the Humber have bucked the trend with positive price inflation, outperforming the national average.

This pattern extends to other parts of the UK, with the West Midlands, Wales, Scotland, and Northern Ireland also seeing relative stability compared to the struggling south.

Rising Mortgage Costs Impact Regional Trends

One of the key drivers behind these regional variations is the increase in mortgage rates. Higher house prices in the south mean that buyers face greater financial hurdles, often deterring upsizing or moving altogether.

Over the past three years, mortgage payments for a typical buyer have risen by 50-70%, with the most significant monetary impact in southern regions. For example, annual mortgage repayments on an average-priced home in London are now £7,500 higher than in 2021. In contrast, regions with lower house prices, such as the North East and North West, have seen more manageable increases ranging from £2,350 to £3,900 annually.

Regional Winners: The North East and North West

Among the regions, the North East and North West lead in house price growth. Over the past year, prices in the North East rose by 1.3%, while the North West saw a 1.1% increase. Yorkshire and the Humber followed closely with a 0.8% rise, and the West Midlands posted a 0.5% increase.

Zoopla anticipates that these trends will persist throughout 2024, with house prices firming but not accelerating due to the ongoing adjustment to higher borrowing costs..

Smart Money Is Moving North

Steven Hickey, Director at northern property investment specialists, Find UK Property comments:

“While the north continues to thrive, the south grapples with the challenges of higher mortgage costs for both homeowners and landlords. Properties in the north require a smaller proportion of your income if you’re a potential or existing homeowner. If you’re a landlord, the rental yields are considerably higher and require less capital with a portfolio in the north.” 

Conclusion

The UK property market is navigating a dynamic landscape, with transaction numbers climbing and regional disparities shaping house price trends. As the market adjusts to these conditions, 2024 promises increased activity and stability, providing opportunities for buyers and sellers alike.