Purchasers and vendors continued to return to the housing market in February, and are expected to boost the number of home sales by 10% this year, the latest figures from Zoopla show.

All measures of activity were higher than in February 2023, the property portal said, with agreed sales up by 15% and buyer demand rising by 11%.

As a consequence, the market is on track to reach 1.1m transactions across the year, up from 1m in 2023, Zoopla said.

The latest Zoopla House Price Index shows that the number of homes for sale are a fifth (21%) higher than a year ago, providing yet more evidence of greater buyer confidence and more realism on pricing by sellers. The North East (+17%) and London (+16%) have led the rebound in sales.

The UK rate of house price inflation is down 0.5%, which marks an improvement on the 1.4% fall recorded in October 2023.

Slowing house price falls is a trend recorded across all regions of the UK. Five English regions are still registering annual price falls of up to -2.1%, with house price growth now in positive territory across the remaining four regions of England, as well as Wales, Scotland and Northern Ireland where annual price inflation is 4.3%.

Firmer pricing of homes is evidence that house prices do not need to fall to support sales: supported by the fact estate agents are agreeing an average of six new sales a month, versus 5.2 this time last year.

Zoopla says that there are tangible impacts on the cost of a home depending on location, and this is contributing to a ‘three-speed’ housing market across the UK.

1) Southern England regions – covering the Eastern, South East and South West regions, outside London, these areas have registered the largest annual price falls. Rising mortgage rates and reduced household buyer power have hit these markets with the average home price at £344,000 – an increase of £80,800, or 30% above the UK average.

2) London – London performs differently to the rest of southern England. While it is the most expensive housing market, with an average price of £534,000, it is a market that has registered much lower levels of house price inflation over the last seven years. Affordability has been improving slowly over this time opening the market up to more potential buyers than before. The rebound in demand and low growth in the available supply of homes for sale (just 7% higher v 21% for the UK) explains why the annual rate of price inflation is improving more quickly than the southern England regions.

3) Rest of the UK – while house price growth has slowed rapidly over the last 12 months, annual price falls have been very limited across the rest of the UK where house prices are at or below the UK average. The impact on buying power from higher mortgage rates has been less pronounced.

Source: Zoopla House Price Index

Falling mortgage rates have supported the upturn in activity along with faster growth in household incomes. Mortgage rates are back to where they were a year ago with lenders now pulling mortgage deals priced below 4% as the cost of finance used to fund mortgages has increased modestly in recent weeks. Buyers should anticipate 4-5% mortgage rates over much of 2024 with mortgage rates in the 4-5% range consistent with flat to low single digit price rises.

Richard Donnell, executive director at Zoopla, said: “The housing market has proved very resilient to higher mortgage rates and cost of living pressures. More sales and more sellers shows growing confidence amongst households and evidence that 4-5% mortgage rates are not a barrier to improving market conditions.

The momentum in new sales being agreed has been building for the last 5 months and the sales market is on track for 1.1m sales over 2024 supported by new sellers coming to the market. While sales are set to increase we don’t expect house price growth to accelerate further in 2024. ”