The UK’s current house price inflation has slowed to 7.8%, the slowest rate of growth recorded since November 2021 following October’s mini budget, according to Zoopla, which adds that the housing market is transitioning from an unsustainably strong market to a more balanced one.
The firm says that buyer demand is down by 44% compared to a year ago, with a slower decline seen in sales at -28%. Property sales are being agreed by those who still have low-rate mortgage offers and amongst certain buyers, including would-be first-time buyers, facing steep rent rises or buyers less reliant on mortgages. Sales have fallen less in more affordable areas and London where market conditions have been weaker for some time, according to the report.
More homes are now coming to the market for sale, with the total stock of homes available up 40% vs 2021. However, the number of homes for sale is still almost 20% below pre-pandemic levels.
House price inflation is losing momentum fast. The headline, annual rate of UK growth, at 7.8%, is the lowest since February 2020. However, Zoopla’s data is yet to record any price falls over the last three months across UK countries, regions, or major UK cities.
The company stated: ‘We expect price growth to dip into negative territory in H1 2023 as the market adjusts to weaker buying power and concerns over the economic outlook. Sellers are now having to accept discounts to asking prices in order to achieve a sale - a trend that has become more apparent in recent weeks. The average price achieved in recent weeks has been 3% below asking price when for much of 2021 and the first half of 2022 it has been 0%. We expect discounts to widen further in 2023. History shows that when discounts reach 5-6% this points to flat to falling prices. It’s important sellers who want to achieve a sale are realistic on selling prices.’