The UK housing market experienced a more pronounced summer slowdown than usual in July, with a 9% year-on-year decrease in agreed sales, according to property website Zoopla. This downturn is attributed to a combination of rising mortgage rates and political uncertainty.
Average mortgage rates have increased from 4% at the beginning of the year to approximately 4.75%, adding an estimated £1,500 annually to the cost of purchasing an average-priced home. This financial pressure, coupled with the political landscape surrounding the selection of a new Prime Minister and the distraction of the World Cup, has reportedly curbed buyer demand.
House price growth has consequently been subdued, with fewer sales leading to reduced competition and fewer bidding wars. The average home's value has seen a modest increase of 1.3%, or £3,400, over the past year, reaching an average of £272,800. However, some regions have experienced price declines, with London and the South East seeing year-on-year drops of £3,270 and £1,480, respectively. In contrast, Northern Ireland and the North West have seen price increases of £9,610 and £7,100 over the same period.
Zoopla data indicates that the share of sellers reducing their asking price by 5% or more typically peaks in September, as buyers return from holidays and aim to move before Christmas. However, Richard Donnell, executive director at Zoopla, advises sellers not to wait until autumn. He suggests that those listing properties at spring asking prices in October risk missing a crucial window of activity.
Nearly a third of homes currently on the market were listed between April and June and remain unsold without a price reduction. Donnell recommends that sellers consult local agents to understand their specific market conditions rather than relying solely on national trends. While waiting is a viable option for those not needing to move urgently, he emphasizes that pricing to meet current buyer demand is key to securing a sale.
Regional variations persist, with Warrington, Hull, and Dundee identified as housing market hotspots showing sustained sales increases and higher price growth compared to the previous year. Warrington, for example, has seen prices rise by 3% year-on-year. Conversely, Bath, Oxford, and Harrow have experienced fewer sales and a shift from positive to flat or negative price growth over the past 12 months. Harrow, in particular, has seen average property values fall by 0.8% in the last year, following a trend of longer selling times observed earlier in the year. The article also notes that increased inflation, partly driven by geopolitical conflicts, has reversed expectations of Bank of England interest rate cuts, contributing to higher mortgage costs for new buyers and those remortgaging.