Higher borrowing costs predicted to cause sales to fall to lowest level in 11 years
The number of housing sales in the UK is on track to be 20% lower than last year as higher borrowing costs take their toll on the market.
Zoopla’s latest house price index (HPI) predicted the number of homes sold this year is expected to be the lowest since 2012 following a series of interest rate hikes by the Bank of England to control inflation.
A million sales completions are anticipated in 2023, the equivalent of the average household moving once every 23 years, an increase of six years comopared to 2021.
Zoopla also found that annual UK house price growth has slowed to +0.1%, the lowest since 2012, and -0.5 percentage points lower than last month.
Mortgage backed sales are likely to be 28% lower than 2022 as higher rates impact upon mortgage-reliant demand, although cash buyer sales are expected to hold in line with 2022 levels, accounting for more than one in three sales in 2023, the firm said.
The housing market’s north-south divide is also still playing a key role, according to the HPI, with the south of England seeing price reductions of up to -1% while all other regions and countries of the UK are posting low, single digit price growth.
Meanwhile, faster earnings growth is improving housing affordability, which looks set to improve by 9-10% over the course of 2023 as prices register modest falls and average earnings increase, the HPI found.
The findings are gloomier than those published earlier this month by the Office for National Statistics, which found overall house prices increased by 1.7% across the UK in the year to June, to £287,546.
The rise posted by the ONS was still the slowest rate of annual inflation since July 2020 in the pandemic, and followed a fall in average prices in late 2022 and early 2023.
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