Mortgage rates at three-year high, resulting in declining buyer demand
House price growth slowed to 0.8% in August, the lowest monthly rate since July 2024, according to Zoopla.
The property website’s latest house price index (HPI) revealed the average price of a home last month was £273,000, with growth down from 1.7% a year ago and 0.9% the previous month.
Zoopla attributed this to falling flat prices, which have been declining for 15 consecutive months, while house prices continue to rise by 2-2.5% a year.
Meanwhile, the number of homes for sale was up 5% year-on-year, while sales agreed fell 9%, affecting every region and country across the UK. A quarter of newly listed homes had been on the market before, with six in ten relisted at a lower price. The number of sales agreed fell most sharply in the West Midlands, down 15% from last year, while Scotland saw a decline of 1%.
Mortgage rates reached a three-year peak at 5.2%,which Zoopla said has resulted in a fall in buyer demand.
Richard Donnell, executive director at Zoopla, said: “The Middle East conflict has pushed up energy prices and mortgage rates, tempering the autumn rebound in housing activity. Borrowing costs are likely to remain elevated, with house price inflation drifting towards 0.5 per cent by year-end and annual sales expected to be closer to 1.1 million versus 1.2 last year.
“While key measures of housing market activity are lower than last year, there is still plenty of demand for homes. Buyers are simply more cautious and selective about what they view and offer. The most challenging pricing decisions face sellers of flats and larger houses across southern England.”
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