Home sales agreed have fallen 9% compared with a year ago as higher mortgage rates squeeze buyers and give them greater negotiating power, Zoopla reveals.
The portal’s latest House Price Index shows the number of homes for sale is meanwhile 5% higher than last year, widening the gap between supply and demand and increasing competition between sellers.
Annual house price growth has slowed to 0.8%, its weakest level since July 2024, with the average UK home now valued at £273,000.
Zoopla estimates average mortgage rates have risen from around 4% at the beginning of the year to 5.2%, adding approximately £150 a month – or £1,800 a year – to repayments for a typical buyer.
BORROWING COSTS RISE
Separate data highlights the pressure facing buyers. Bank of England figures published yesterday show mortgage approvals for house purchase fell to 54,900 in August, below the six-month average of around 60,100.
Mortgage pricing has also moved higher. Moneyfacts data show the average 2-year residential fixed mortgage stood at 5.93% on 29 September, with the average 5-year fix at 5.94%.
Earlier this month, Moneyfacts reported successive rounds of fixed-rate increases by lenders as inflation expectations and volatility in swap markets pushed up funding costs.
HOMES RETURN TO MARKET
There are also signs that sellers who previously failed to secure a sale are returning to the market.
A quarter of homes newly listed during September have already been marketed for sale during the previous year.
Six in 10 of those properties have returned with a lower asking price, while the remainder have been relisted at their previous price.
Relistings are most common among flats and larger houses, which Zoopla says are generally taking longer to secure buyers.
In London, a third of flats coming onto the market have previously been listed, compared with fewer than one in 10 in Scotland.
REGIONAL DIVIDE
The slowdown varies significantly across the country. Sales agreed are down 15% year-on-year in the West Midlands and 14% in the East of England. Scotland is proving considerably more resilient, with sales agreed down just 1%.
Around three-quarters of Scottish homes find a buyer within three months, compared with approximately half across northern England and only three in 10 in London.
The difference is also apparent in prices. Scottish house prices are up 3.3% annually and flats 2.1%, while house values have fallen 0.3% in the South East and flat prices are down 2%.
FLAT PRICES FALL
Across the UK, flat prices have now fallen for 15 consecutive months and are 1.3% lower than a year ago.
House prices remain 1.3% higher nationally, although Zoopla says growth has slowed in recent months as higher mortgage rates and weaker sales activity affect the market.
Northern Ireland records the strongest annual house-price increase at 6.7%, followed by the North West at 3.6% and Scotland at 3.3%.
Richard Donnell (main picture, inset), Executive Director at Zoopla, says: “The Middle East conflict has pushed up energy prices and mortgage rates, tempering the autumn rebound in housing activity. Borrowing costs are likely to remain elevated, with house price inflation drifting towards 0.5 per cent by year-end and annual sales expected to be closer to 1.1 million versus 1.2 last year.
“While key measures of housing market activity are lower than last year, there is still plenty of demand for homes. Buyers are simply more cautious and selective about what they view and offer. Sellers who factor in local market conditions and seek detailed advice from their local estate agents on how to set the asking price, can still find a buyer relatively quickly.
“Getting the right price from the outset is essential. If you are selling an affordable two or three bed home in the North of England it is a strong market. The most challenging pricing decisions face sellers of flats and larger houses across southern England.”
