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Zoopla: UK Agreed House Sales Are On The Rise

More prospective house sellers are returning to the UK’s property market, pushing agreed home sales to their highest point of the year in May, according to Zoopla. However, it warned that rising mortgage rates could knock the rebound in activity.

The property website found that house prices have fallen by 1.3% nationally over the past six months, but the speed of price falls has been decreasing as buyer confidence slowly improves.

Demand for properties remained weaker in May than a year earlier, although last month, agreed house sales climbed 11% higher than the five-year average, which appears to have convinced more sellers to put their properties on the market.

While the slide in house prices since Liz Truss’s ill-fated mini-budget last autumn, which led to mortgage rates shooting up, has been more modest than initially anticipated, Zoopla found sales volumes are being affected by higher mortgage costs and inflation. Sales volumes are expected to be 20% lower this year than in 2022.

It comes as homeowners looking for new mortgage deals have been warned to prepare for fixed-rate offers above 5% in the coming weeks, after recent disappointing inflation figures, and after economists forecast that the Bank of England’s interest rate could exceed 5% by the end of the year.

However, Zoopla said that higher mortgage rates had a limited impact on house prices, as mortgage regulations introduced in 2015 have required new borrowers to prove to their lenders that they could afford significantly higher mortgage repayments at 6-7% rates.

Despite the increase in house sales in May, Zoopla found that sellers still have to retain “realistic” asking prices to attract interest from potential buyers, who closely follow economic developments.

Close to a fifth (18%) of homes currently listed for sale on Zoopla have had their asking price cut by more than 5%, down from 28% in February.

Richard Donnell, the executive director of research at Zoopla, said: “Sellers shouldn’t get carried away by more positive data on the housing market and need to price their homes realistically if they are serious about moving home in 2023.

“Homebuyers remain price sensitive with one eye firmly on the outlook for the economy, the cost of living and the trajectory of mortgage rates, which appear likely to edge higher in the coming weeks.”

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