Three in five homes listed for sale since January are still on the market, according to property portal Zoopla, as high mortgage rates have frozen out droves of potential buyers and left sellers in some areas waiting months for an offer.
Agreed sales across the UK are running 7% below last year, Zoopla said, but the picture varies starkly by region. In Wales, sales have slumped 12% and in the East Midlands 11%, while first-time buyers – most exposed to the surge in borrowing costs – have seen their purchasing power gutted.
“Three in five homes listed since January remain unsold amid high mortgage rates, Zoopla warns.”
The spike in mortgage rates came in April, triggered by financial upheaval caused by the US-Israeli war with Iran. At its peak, the average two-year fixed rate jumped from 4.83% at the start of March to 5.90% on 12 April, according to financial information service Moneyfacts. It has since eased to 5.54%.
For the typical mortgage, that added an extra £125 a month in payments compared with January. In London, first-time buyers faced an even steeper jump: £232 a month extra. Overall, buyer demand fell 15% year-on-year to the end of May, Zoopla’s report found.
“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.”
Yet there are glimmers of hope. Moneyfacts data shows the average two-year fix has dropped to 5.54%, prompting some lenders to compete more aggressively. Donnell pointed to recent cuts in rates as a positive.
“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,” he said.
But not all regions feel the same pinch. In north-east England, mortgage costs for first-time buyers were only £66 a month higher over the period – a fraction of the London burden.
The Bank of England reported 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. The drop in demand from first-time buyers has had an impact, though exact figures on the scale remain unclear.
For now, the market remains a tale of two halves: sellers who price realistically are moving homes; those who overreach are stuck waiting. The key question is whether falling rates will be enough to thaw the freeze.