Three in five homes listed for sale since January have failed to find a buyer, according to property portal Zoopla, as rising mortgage costs push demand to a two-and-a-half year low and leave sellers trapped in a stagnant market.
The figures, covering the market to the end of May, show agreed sales running 7% below the same period last year – with Wales and the East Midlands hit hardest, recording drops of 12% and 11% respectively. Across the UK, buyer demand has fallen 15% year on year.
“Three in five homes listed since January remain unsold as high mortgage rates freeze buyer demand.”
The squeeze was triggered by a jump in mortgage rates in April, caused by financial upheaval from the US-Israeli war with Iran. At its peak, that added an average £125 a month to a typical mortgage compared with January. In London, first-time buyers faced an extra £232 a month.
The average two-year fixed rate climbed from 4.83% at the start of March to 5.90% on 12 April, according to Moneyfacts. It has since eased to 5.54%, but the damage was done. Mortgage approvals for house purchases fell to a two-and-a-half year low in May, the Bank of England said.
First-time buyers have been most exposed, though in the north east of England the additional monthly cost was a more manageable £66.
Richard Donnell, executive director at Zoopla, said sellers must act. “For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting.”
But he struck a cautiously optimistic note for buyers. “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.”