Rising geopolitical tensions and higher mortgage rates are cooling buyer demand but a core group of committed movers is continuing to support UK housing sales, according to the latest data from Zoopla.
Buyer demand has fallen sharply in recent weeks, with enquiries down 13% year-on-year as uncertainty linked to events in the Middle East feeds through into financial markets.
Average mortgage rates have risen by 0.4 percentage points over the past month, with many sub-4% deals withdrawn.
Despite this, sales agreed have proven more resilient, slipping just 2% annually, highlighting a growing reliance on buyers who are either chain-ready, cash-funded or proceeding out of necessity.
ENQUIRIES DOWN
The divergence between demand and sales is now evident across the UK. Buyer enquiries are down between 7% and 19% depending on region, with the steepest falls in the North East and West Midlands.
However, agreed sales are holding steady in several areas, including London, Wales and Yorkshire and the Humber.
At the same time, housing supply continues to build, with the number of homes for sale up 6% year-on-year, giving buyers more choice but also increasing competition among sellers.
House price growth remains stable at 1.3% annually, with stronger growth in more affordable regions such as the North West, while price falls in southern England have begun to ease.
Around a quarter of transactions are cash purchases, while many mortgaged buyers have secured borrowing in advance, insulating them from short-term rate volatility. However, the growing reliance on less rate-sensitive buyers points to potential fragility if borrowing costs rise further.
COMMITTED BUYERS
Richard Donnell, Executive Director at Zoopla, says: “The market remains active, but becoming increasingly reliant on a smaller pool of serious buyers. Some early-stage buyers are adopting a wait and see approach but there is a sizable group of committed buyers who are pressing ahead with housing purchases.
“If mortgage rates stabilise at current levels we expect sales activity to continue to hold up well compared to last year.
“Further increases in borrowing costs could weaken demand and impact sales volumes later in the year. The outlook is far from clear although we can see demand has stabilised over recent days.
“For buyers, there is less competition and more choice, but affordability is becoming more stretched. For sellers, homes are still selling, but buyers are more selective and price-sensitive. Setting a realistic asking price with the help of a local agent will be critical to securing a sale.”
SHAKEN BUT NOT STIRRED
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, adds: Although we may have feared the worst, bearing in mind the turmoil in the world and uncertainty over direction of travel for interest rates and inflation, so far the overwhelming majority of our buyers and sellers seem shaken but not stirred.
“There is no question the number of enquiries has dropped but the more serious buyers and sellers seem keen to get on with their moves. Worries about higher costs have inevitably filtered down into negotiations but so far a sense of realism is prevailing.
“Looking forward, we expect this new-normal to continue at least until it becomes more apparent how long hostilities will last.”
