First-time buyer markets in London and the South East are showing the clearest signs of strain from higher mortgage rates despite overall housing activity holding firm.
The latest House Price Index from Zoopla shows the average time to sell a home has increased by just one day to 33 days, with sales agreed only 3% lower year-on-year and buyer demand rebounding after Easter.
However, affordability pressures are increasingly visible in outer London and commuter markets, where first-time buyers are more exposed to higher borrowing costs and stamp duty.
Sales times in South East London have risen by 34%, while areas such as Harrow, Uxbridge and Bromley have also recorded notable slowdowns. Similar trends are emerging in commuter locations including Dartford, Slough and Peterborough.
DUAL PRESSURE
Zoopla’s data shows the dual pressure facing first-time buyers in the capital, where mortgage costs remain elevated and four in five buyers are paying stamp duty at around 3% of the purchase price, compared to less than one in ten elsewhere in England.
Mortgage rates have begun to ease slightly in recent weeks, helping to support a recovery in enquiries but affordability constraints continue to weigh on transaction speeds in southern markets.
Richard Donnell (main picture, inset), executive director at Zoopla, said: “Homes are taking just one day longer to sell than this time last year. That is a strong result given increased uncertainty and mortgage rates rising sharply in March.
“Buyer enquiries have rebounded after Easter and with mortgage rates starting to fall, we expect the market to remain active through the rest of the year. Households who need to move are getting on with it though market conditions vary widely between North and South.”
“Mortgage rates are drifting lower and there is greater choice of homes for sale.”
He added: “For sellers, the message is clear – well-priced homes are still finding buyers in the same time as last year across much of the country.
“For buyers, mortgage rates are drifting lower and there is greater choice of homes for sale.
“The best-value homes are moving quickly, particularly in northern cities and Scotland whereas the room for negotiation is greater across southern regions.”
MIDDLE EAST IMPACT
Tom Bill, head of UK residential research at Knight Frank, said: “The impact of the Middle East conflict on the UK housing market has not yet fully materialised.
“The disappearance of sub-4% mortgages, a looming inflationary hump caused by higher energy costs and a government reportedly considering responses like rent controls mean the impact will linger for much of this year. That will keep downwards pressure on prices and, to a lesser extent, transaction volumes.”
PRICES UNDER CONTROL
And Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, added: “Housing market activity is proving more resilient than we dared hope as war in the Middle East continues for longer than originally anticipated.
“However, the amount of available property in our offices – particularly flats – is keeping prices under control and resulting in more protracted transactions as buyers flex their muscles.
“Worries about the direction of travel for interest rates and the cost of living means more price-sensitive purchasers are taking their time before submitting offers in expectation the after-effects will linger for considerably longer even if hostilities end soon.”
