Three in five homes listed since January are still on the market amid a drop in buyer demand and due to issues of overpricing, Zoopla has warned.
The property portal’s latest House Price Index shows sales agreed have fallen by 7% annually this month and buyer demand is down 15%.
This was blamed on higher borrowing costs and wider political uncertainty impacting the market.
Wales has seen the steepest decline in sales agreed at 12%, followed by the East Midlands with an 11% drop, while the West Midlands has seen the largest drop in buyer demand at 30% year-on-year.
IMPACT OF RISING MORTGAGE RATES
These higher borrowing costs are adding £125 to the average mortgage, with this reaching £232 for a first time buyer in London, Zoopla said.
Its data also suggests house price inflation has slowed to 1.4% annually, with a clear regional divide reflected by Northern prices increasing by 3.5% while average London values are down for the ninth consecutive month
Zoopla says it expects house price growth to slow to 1% over the second half of the year with prices in the North of England and Scotland holding firmer than in the South. London and the South East are set to remain flat to negative.
VENDORS URGED TO ADAPT TO BUYER’S MARKET
Richard Donnell, executive director at Zoopla, says: “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.
“For sellers still waiting for an offer, the conversation to have is about price.
“Correctly priced homes are selling, while overpriced homes are sitting. For buyers, rates are falling, there is more choice of homes for sale than a year ago and motivated sellers are willing to negotiate. If you are ready to move, conditions are more favourable than they were three months ago.”
THE NEW NORMAL
Commenting on the data, Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “A combination of too much property on the market across various price ranges, as well as continuing uncertainty about the protracted war in Iran and the subsequent impact on the economy, is proving lethal as far as homebuyer and seller confidence is concerned.
“Sales are taking much longer and it is proving increasingly difficult to generate commitment. However, the overwhelming majority of sales which have been agreed are proceeding, although inevitably more slowly and suffering relatively few price negotiations.
“This is likely to prove the ‘new normal’ at best, looking forward, particularly now that domestic political uncertainty is another factor to consider.”
