House prices are on track to finish the year 2.5 per cent higher than when it began, according to Zoopla - but sellers are still being warned not aim too high with their asking prices.
It marks a more upbeat forecast from the property portal, which predicted at the beginning of the year that prices would fall by 2 per cent.
The property website revealed house prices rose by 1.4 per cent over the first seven months of 2024, compared to just 0.1 per cent during the same period last year.
Falling mortgage rates are helping to spur the property market back into life.
With some buyers now able to secure a five-year fixed rate mortgage below 4 per cent, Zoopla says there are 20 per cent more buyers searching compared to this time last year - when the lowest five-year fixed mortgage rates were above 5.25 per cent.
Zoopla says this has unsurprisingly translated into an uptick of sales. The number of sales agreed is up 23 per cent on last year.
However, while activity has somewhat recovered, a glut of homes on the market alongside mortgage rates that are still higher than many are used to are helping to keep a lid on prices.
Sellers are still being advised to play it sensible with asking prices, as in August one in five have needed to cut their asking price by 5 per cent or more.
The number of homes for sale has risen to a seven-year high, according to Zoopla - with the average estate agent having 33 homes to sell.
This means that it continues to be a buyers' market.
One in five sellers are cutting the asking price by 5 per cent or more, and properties are taking over twice as long to sell if priced too high.
Zoopla's experts expect greater choice for buyers will keep house price inflation in check over 2024 and into 2025.
Richard Donnell, executive director at Zoopla says: 'Momentum in the sales market continues to build as mortgage rates drift lower and more and more sellers gain the confidence to list their home for sale.
'Buyers have much greater choice which will support sales numbers, but this will keep prices rises in check.'
Mortgage rates make buyers seek a bargain
While house prices are edging higher, buyers remain price-sensitive given that mortgage rates remain high.
This is slowly being offset by faster income growth, but there is further to go to fully repair affordability, according to Zoopla.
This explains why one in five homes had the asking price reduced by 5 per cent or more in August to attract greater buyer interest.
Homes that need an asking price cut take more than twice as long to sell as homes without a price reduction.
Properties that have been discounted are also twice as likely to see sales fall through and are more likely to not be sold at all, according to separate analysis of sales over the last five years by Rightmove.
Like Zoopla, Rightmove says many sellers continue to ask for far more than their home is really worth.
Richard Donnell of Zoopla adds: 'We find it takes around 28 days to agree a sale where there has been no asking price reduction but sales take 73 days on average where the asking price has been cut by 5 per cent or more to attract demand.
'Getting the asking price right at the outset is essential to allow serious sellers to secure a timely sale.
'If you need to cut the asking price by 5 per cent or more then your home will take twice as long to sell, or may not sell at all.'
North-South house price divide continues
The improvement in house prices over the year to date is being felt across most areas of the country, according to Zoopla.
However, there continues to be a North-South divide, with prices in the North rising.
In the 12 months to July, house prices were up in eight regions, but in four regions they had fallen.
Average house prices are down 0.9 per cent year-on-year in the East of England, 0.7 per cent lower in the South East and 0.6 per cent lower across the South West.
Prices in London and East Midlands are virtually flat compared to 12 months ago.
House prices are rising faster than the national average in lower value and more affordable housing markets, often in proximity to larger cities in England.
Prices in Wolverhampton, are up 3 per cent year-on-year, in Oldham they are up 2.8 per cent, and in Wakefield they are up 2.7 per cent.
House prices are rising even faster in Scotland. In Dumfries and Galloway they are up 4.4 per cent on the year, while Galashiels and Falkirk are both up 3.1 per cent.
What next for house prices?
Zoopla is not alone in predicting that house prices will finish the year higher than they started.
The property firm Knight Frank is also predicting that house prices will finish in positive territory.
Tom Bill, head of UK residential research, said: 'The simple equation for the property market this autumn is that buyer demand will increase as mortgage rates continue to fall.
'As underlying inflation comes under control, more sub-4 per cent mortgages appear and a further rate cut is expected before Christmas, we think UK house prices will increase by 3 per cent this year.
'Financial pain will continue to enter the system as buyers and sellers roll off favourable rates and there is uncertainty surrounding October’s Budget, which means the scope for price exuberance is low.'