According to Zoopla, three out of every five homes listed since January remain unsold. High mortgage rates are significantly curbing buyer enthusiasm. Sellers in many regions are struggling to close deals due to a combination of tempered demand and unrealistic asking prices.
Nationally, agreed sales have slipped by 7% compared to last year. Regional disparities are stark, with Wales seeing a 12% drop and the East Midlands experiencing an 11% decline. While first-time buyers have faced the brunt of these borrowing costs, increased competition among lenders is now leading to modest rate reductions.
Financial instability linked to geopolitical tensions in April caused a spike in mortgage rates, adding roughly £125 per month to typical repayments compared to January. In London, this impact was even more pronounced, with monthly costs for first-time buyers rising by £232. Data from Moneyfacts indicates that the average two-year fixed rate reached a peak of 5.90% in mid-April before receding to 5.54%.
Richard Donnell, executive director at Zoopla, notes that the national average obscures local realities. He emphasizes that correctly priced properties are still moving, while overpriced listings remain stagnant. Donnell suggests that for buyers, the environment is improving as rates stabilize and sellers become more amenable to negotiation.
The Bank of England reported that mortgage approvals hit their lowest point in two and a half years during May. This slowdown is particularly visible in the starter home market, with two-thirds of one and two-bedroom flats listed this year currently unsold. Conversely, northern England and Scotland have seen more resilience, partly because the absolute increase in monthly mortgage costs has been smaller in those regions.
Estate agents report that inventory continues to outpace demand. Jeremy Leaf, a north London agent, noted that while securing commitments has become more challenging and time-consuming, most agreed-upon sales are still moving toward completion, albeit at a slower pace than previously expected.