Three in five homes listed for sale since January are yet to find a buyer, according to Zoopla’s latest House Price Index, as sales agreed fall by 7% year-on-year.
The Index also reveals that buyer demand has fallen by 15% year-on-year across the UK, with the combination of political uncertainty and higher borrowing costs hitting buyers differently across the country.
An increase in mortgage rates in April has added to £232 to the average first-time buyer’s costs in London but just £66 in the North East, which Zoopla says is a reflection of differences in market performance across the UK and accurate pricing has never been more important.
Zoopla says that the falling rate of sales agreed is a result of higher mortgage rates and political uncertainty, which have reduced the pool of committed home buyers, while a potential change of prime minister and questions over future tax and spending priorities that will be included in the next Autumn Budget have added to the uncertainty.
Buyer demand has also fallen, with more potential buyers taking a wait-and-see approach until the outlook becomes clearer.
Across the country, Wales has seen the largest decline in sales agreed, down 12% year-on-year, closely followed by the East Midlands (-11%), East of England (-10%) and the South West (-10%). London saw a fall of 9% on the previous year. However, the declines were more modest in the North regions and Scotland, decreasing between 3 and 6%, where buyers face fewer home options for sales and can benefit from less severe increases in mortgage repayments compared to those in the South.
The West Midlands has seen the steepest decrease in buyer demand, with this dropping by 30% year-on-year, closely followed by the North East at -29%.
Beyond the regional view, Zoopla’s data also shows that two and three-bedroom houses are selling at a pace similar to last year’s across the country, with committed movers still transacting.
One and two-bedroom flats remain the weakest market segment, as over two-thirds listed this year remain unsold. With first-time buyers being the typical audience for these properties, this reflects their exposure to higher buying costs and a subsequent step back from the market.
This effect is most acute in London, where a first-time buyer faces not only a higher mortgage but stamp duty costs equivalent to around 3% of the purchase price, compared to less than 1% for a first-time buyer in northern England.
A fall in sales is also starting to feed into UK house price inflation, which has slowed slightly to +1.4% year-on-year, and Zoopla predicts that it is set to slow further into the autumn unless mortgage rates fall further and sales recover.
Regionally, the North East and North West are currently the strongest performing regions in England, seeing growth of 3.5%, while those in Scotland, where there remains a scarcity of supply with fewer homes for sale than last year, are registering growth of 3%.
At the other end of the spectrum, London is facing its ninth consecutive month of negative annual house price growth, with this sitting at -0.2% in May. The South East is similarly low at -0.3%.
Richard Donnell, executive director at Zoopla, said: “Higher mortgage rates have hit sales and squeezed affordability for home buyers alongside increased political uncertainty. The impact is less severe than what the market faced after the 2022 mini-budget, and mortgage rates have started to fall.”
“It’s a buyer’s market across much of the South right now, but motivated sellers in northern England and Scotland are still finding buyers at broadly last year’s pace, which shows the housing market is not moving at one speed.”
“The national picture can only tell you so much, and local market conditions vary considerably across the country. The most important step, whether you are buying or selling, is speaking to a local agent who knows what is actually happening on your street.”