The housing market is hotting up, according to Zoopla, with an uptick in sales and buyers having to pay closer to the asking price.

The property website said house prices have increased in every region of the UK in the first six months of 2024, and are on track to end the year 2 per cent up compared to January.

The improved outlook for the market is being bolstered by an increased number of homes being put on the market, according to Zoopla.

And the property listing site said buyers are now paying the greatest proportion of asking prices for 18 months, as discounts narrow and sellers price more realistically in the first place. 

It says the average estate agent has 33 homes for sale, which is more than at any point in the past six years.

Rather than leaving homes languishing on the market and forcing prices to fall, Zoopla says the increased level of choice for buyers is supporting more sales going through.

The number of sales agreed is 16 per cent higher than a year ago, with sales up across all regions. It says sales agreed are now 22 per cent above pre-pandemic levels.

Buyers are also paying a greater proportion of the asking price than they were last year, when higher mortgage rates crushed demand.

Zoopla says buyers are currently paying 96.8 per cent of the asking price, which is the highest figure for 18 months.

In real terms, this equates to houses selling for an average of £16,600 below asking.

In October last year, buyers were paying £23,000 below the asking price.

In the longer term, Zoopla says economic growth, rising household incomes and increased home building will benefit homebuyers, according to Zoopla. 

It says average incomes are set to rise 4.5 per cent this year and it would also expect incomes to rise faster than house prices in 2025.

Richard Donnell, executive director at Zoopla says: 'The housing market is starting to hot up after a stone cold 2023.

'There are clear signs of growing confidence amongst buyers and sellers with many more homes for sale and buyers paying an increased proportion of the asking price.

'The housing market is essentially an extension of the UK economy. Government policies focused on economic growth that feeds into income growth will help support both home buyers and renters.'

Interest rate cut would boost housing market 

It is likely that lower mortgage rates are encouraging buyers and home movers to crack on with their plans this year.

Last week, the lowest five-year fixed rate mortgage dipped below 4 per cent for the first time since February.

The average five-year fixed rate mortgage across the whole market is currently 5.4 per cent, according to Moneyfacts. This time last year the average was at 6.35 per cent.

Zoopla says the first base rate cut will deliver a boost to consumer confidence and market activity.

The next base rate decision takes place at the Bank of England on Thursday with market forecasts currently divided over whether the first cut will come this week or in September.

Net mortgage approvals for house purchases, which is an indicator of future borrowing, remained broadly stable at 60,000 in June, according to the latest Bank of England figures - this is slightly below the pre-pandemic average.

Anthony Codling, head of European housing and building materials for investment bank RBC Capital Markets, views this as a sign of a fairly cool housing market, rather than one that is heating up.

'In our view, the UK housing market appears to be treading water, waiting for, hoping for the first base rate cut,' said Codling.

'There is a small chance that a cut could come on Thursday, but we believe the first cut is more likely in September.

'Once mortgage rates start to fall, we expect housing market activity to pick up.'

Simon Gerrard, managing director of Martyn Gerrard estate agents is optimistic about the impact of the first base rate cut, although he thinks there are several factors promising a return to house price growth soon.

'Inflation has held steady at the Bank of England's target of 2 per cent, so there is a strong chance that the base interest rate will come down in August or September, which will fire the gun on property searches that have been on hold,' said Gerrard.

'From a wider perspective, it has also been of great relief to see the government prioritise building new homes.'

House price forecasts for 2024 

At the start of the year, most forecasts were pointing to house prices falling over the course of 2024.

Zoopla itself was forecasting a 2 per cent fall at the start of the year. Now it expects house prices to finish 2 per cent up.

Halifax was expecting house prices to fall by between 2 and 4 per cent. Knight Frank was forecasting a 4 per cent fall and Savills was predicting a 3 per cent drop on average.

Fast forward almost eight months and Knight Frank now expects house prices to rise 3 per cent this year.

Tom Bill, head of UK residential research at Knight Frank, says its current forecast should play out, unless Rachel Reeves springs some nasty tax rises in the Autumn statement.

'Demand and transaction volumes should increase in the second half of the year as the first rate cut since March 2020 becomes imminent.

'As more mortgages fall below the psychological threshold of 4 per cent, we expect house prices to rise by 3 per cent in 2024.

'One risk on the horizon is the possibility of tax rises in Labour's first Budget, which could dampen demand, particularly in higher price brackets.

'The other is the Renters Reform Bill, which may result in increased supply in the sales market if the new rules are punitive for landlords.'