UK house sales hit yearly high but outlook skewed, says Zoopla

House sales jumped to an annual high in May, according to property website Zoopla, as falling mortgage rates and a strong labour market helped fuel the UK’s spring selling season.

Agreed house sales sat 11% higher than the five-year average in May, while prices across the country rose 1.9% compared with the same period in 2022.

Sales will likely be 20% lower over the course of the year, however, Zoopla warned, as weaker demand is still hitting the market, with prices in London also down 0.2% since last May.

“Sellers shouldn’t get carried away by more positive data on the housing market and need to price their homes realistically if they are serious about moving,” Zoopla research executive Richard Donnell said.

“Homebuyers remain price sensitive with one eye firmly on the outlook for the economy, the cost of living and the trajectory of mortgage rates.”

Zoopla forecast prices will remain static throughout the rest of 2023, despite falls of 1.3% in the past six months.

Hargreaves Lansdown (LON:HRGV) finance head Sarah Coles said the future of the housing market is in the hands of the Bank of England and further prospective interest rate hikes.

“Higher mortgage rates would make it more difficult for new buyers to get an affordable mortgage, which could dampen demand and could bring prices down,” she explained.

“Meanwhile, it could create problems for remortgagers, some of whom may be forced to sell up, boosting supply. An imbalance of supply and demand could dent prices.”

Coles added that a slight fall in mortgage rates and the strong labour market had helped boost sales in May, with easing rates of price drops since February also marking positive news.