Higher mortgage rates have contributed to a sharper-than-usual summer housing slowdown, with sales agreed running 9% below last year’s level, latest data from Zoopla reveals.
Average mortgage pricing eased from close to 5% in April to approximately 4.65% in June before increasing again to around 4.75% during July.
Zoopla estimates that rate increases since January have added approximately £125 a month – or £1,500 a year – to the mortgage repayments required to purchase a typical UK home.
The additional affordability pressure has contributed to annual house price growth slowing to 1.3%, compared with 1.7% a year earlier.
SEPTEMBER RECOVERY
Zoopla expects sales activity to pick up in September, when the market has historically recorded a second-half bounce, but said the recovery depended on mortgage rates remaining stable.
A further increase in borrowing costs could delay the return of buyer confidence and restrict purchasing budgets during the important autumn market.
The average UK property is now valued at £272,800, having gained £3,400 during the past year, but regional performance varies substantially.
Prices rose by 5.1% in Northern Ireland, 3.5% in the North West and 3.1% in both Scotland and the North East.
London prices declined by 0.6%, reducing the value of a typical home by £3,270, while the South East recorded a 0.4% fall.
AFFORDABILITY SUPPORTS NORTH EAST
The North East was the only region to record an annual increase in agreed sales, with transactions rising by approximately 4%.
Zoopla attributed its resilience to lower property values, which meant higher mortgage rates produced a smaller increase in borrowers’ cash repayments than in more expensive regions.
Across the country, 76% of local housing markets recorded fewer agreed sales during the past three months. Warrington, Hull and Dundee were among the locations bucking the trend, while Bath, Oxford and Harrow were identified as cold spots.
Richard Donnell, executive director at Zoopla, said: “This summer has seen a sharper slowdown than usual, with higher mortgage rates and political uncertainty both weighing on buyer confidence.”
Buyers have more choice in eight of the UK’s 11 regions, giving them greater negotiating power and increasing the importance of accurate affordability assessments and early mortgage advice.
Zoopla said the September recovery would be driven partly by sellers reducing asking prices to align with what mortgage-constrained buyers could afford.
