Sales held up in the last quarter of 2023, providing support for prices, according to the latest, December 2023 House Price Index by Zoopla.

The firm says that new sales were above average in the final weeks of 2023, around 17% higher than a year ago and even ahead of 2019 levels. ‘Market sentiment is improving due to rising incomes and an initial decline in mortgage rates. An increase in available supply, up a quarter on last year, is also boosting choice and supporting sales,’ stated the report.

Buyers and sellers are becoming more aligned on pricing, reducing the downward pressure on values. Zoopla added: ‘Our headline UK house price index has recorded a slower pace of annual price decline at -1.1% in November 2023, down from +7.2% a year ago. The level of price falls have now moderated across all regions and countries of the UK.’

Cash purchases look set to account for a third of all sales in 2023 and are an important source of pricing evidence. The average price of a cash purchase is 10% lower than the average mortgage funded sale, according to the report.

Mortgaged sales are on track to be 30% lower over 2023 as higher mortgage rates hit demand. The mortgage lender house price indices responded quickly to weaker demand, recording steeper price falls over 2022 Q4 and 2023 H1. However, the annual growth rate for the lender series has improved in recent months as market activity and pricing stabilised, bringing the annual growth rate back towards the Zoopla/ONS series.

Why didn’t house prices fall by more in 2023?
History would suggest that mortgage rates rising from 2% to over 5% would have led to larger price falls than what has been recorded over 2023.