The latest UK House Price Index by Hometrack reported that demand to buy homes is weakening ‘but not falling’ and that average house prices have increased by 8.3%, or £19,800, in the past 12 months. The South West and Wales were jointly the best performing regions, with annual house price growth of 10.6%.
Strong demand and healthy volumes of new sales agreed in the first half of the year continued to support the headline rate of growth. New sales agreed remain in line with last year while stock levels have started to rebuild off a low base, boosting choice for buyers. The average UK estate agent now has 14 homes for sale, up from a low of less than 12 in the spring but below the pre-pandemic level of 20.
Buyer demand is registering the usual summer slowdown and underperforming last year, as economic uncertainty increases, said Hometrack, adding: “Buyer interest this summer is weaker than last year but still above the 2017-2022 average. While allowing for seasonal factors, we expect demand to continue to underperform against last year as we move into the autumn. Demand for homes in London continues to lag the rest of the country due to pandemic and affordability-related factors with annual price inflation (4.1%) less than half the UK average.”
Sales market more sensitive to higher mortgage rates
Despite higher living costs, pandemic factors – such as the increase in working from home and a growth in retirement – continue to stimulate demand for homes. What is yet to fully impact market activity, is higher mortgage rates, which have more than doubled in the last few months.