In a recent shift, the number of buyers looking for homes has increased by 12% in the last four weeks, but the housing market still leans towards buyers, with an average markdown of £12,125 needed to seal a sale, according to the newest Zoopla House Price Index.
Although the surge in demand marks the first uptick since spring, it’s still approximately a third less than the levels recorded a year ago. Notably, even though current higher mortgage rates have slashed buying power by 20%, potential homeowners are not ready to compromise on the size of their prospective properties.
The UK’s house prices have seen a dip of 0.5% over the preceding year. Despite predictions suggesting a decline of 2-3% by the end of the year, it’s worth noting that current prices are still soaring at 17% more than the levels seen before the pandemic.
In the current buyers’ market, the average discount on asking prices for new sales is 4.2%, translating to £12,125. This scenario is most pronounced in London and the South East, with an even steeper average discount of 4.8%. Elsewhere in the UK, the figure stands at a more modest 2.8%.
Richard Donnell, Executive Director at Zoopla, analysed the current situation, noting, “The housing market continues to adjust to a higher mortgage rate environment. Better news on inflation and the end of base rate increases has provided scope for lenders to start reducing mortgage rates which has supported a modest uptick in demand for homes this September. Buyers continue to remain cautious and many are waiting for better value for money and improved affordability from lower house prices or further falls in mortgage rates before returning to the market.
House price falls have been modest with the average house still 17% more expensive than before the start of the pandemic. Forbearance by lenders, tougher mortgage regulations over recent years and a strong labour market appear to have moderated the stress in the market compared to previous cycles that would have driven larger price reductions.
House prices will continue to drift lower, especially in southern England, ending the year 2-3% lower meaning falling mortgage rates are required to boost activity and attract buyers back into the market.”
Nathan Emerson, CEO of Propertymark, commented on Zoopla’s findings: “This recent report reiterates what our member agents are telling us. Last month there was a 29% rise in the number of new properties for sale which shows many people are continuing to find an affordable middle ground when coming to the market and negotiations well underway.
“We imagine this picture will only get stronger with more sales completing in the coming months given the recent positive news of inflation rates remaining unchanged, given much-needed encouragement to those buyers who were hesitant.”
