Three in five homes listed for sale since January remain on the market, according to property portal Zoopla, as high mortgage rates frustrate potential buyers and leave properties in some areas gathering dust.
Agreed sales were 7% below last year, with the downturn hitting Wales hardest — down 12% — and the East Midlands dropping 11%. The slump follows a sudden jump in mortgage rates in April, triggered by financial upheaval caused by the US-Israeli war with Iran, which added an average of £125 a month to a typical mortgage at its peak compared with January. In London, first-time buyers faced an extra £232 a month.
“Three in five homes listed since January remain unsold, Zoopla says, as high mortgage rates and falling demand freeze the market.”
The average two-year fixed rate climbed from 4.83% at the start of March to a peak of 5.90% on 12 April, according to Moneyfacts. It has since eased to 5.54%, but the damage to buyer confidence was done: demand across the UK fell 15% compared with a year earlier, Zoopla said.
First-time buyers, most exposed to higher borrowing costs, bore the brunt. Yet the pain was uneven — in the north east of England, the monthly increase for first-time buyers was just £66.
“The national picture can only tell you so much,” said Richard Donnell, executive director at Zoopla. “For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting.”
He pointed to recent cuts in mortgage rates as a glimmer of hope. “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 Bank of England confirmed the chill, reporting that mortgage approvals for house purchases fell to a two-and-a-half year low in May as deals were pulled from sale and rates rose. With high asking prices still stubborn on many listings, the question remains how many more sellers will be forced to drop their price before the market thaws.