House buyer searches rise across Britain

Landlords considering selling up should note that house buyer searches have risen by 7% compared with last year, although agreed transactions remain lower.

Zoopla says the increase has been recorded across every region and country for the first time since August last year and is the beginning of an ‘autumn bounce’.

Sales agreed are still 6% below last year’s level, but the gap has started to close following a quieter summer.

Meanwhile, the number of homes for sale is 5% higher, giving prospective purchasers more choice.

Mortgage rates restrict buyers

Richard Donnell, executive director at Zoopla, said: “Many buyers have taken a ‘wait and see’ approach over the summer months in response to higher borrowing costs and political uncertainty.

“The low point for activity was mid-July around the time of the World Cup final.”

He added: “Average mortgage rates have stabilised but remain closer to 5% than 4% meaning affordability remains an important factor for many home buyers choosing their next home.

“Buyers have plenty of choice this autumn and will be able to make competitive bids for homes.”

Deposits must rise

Zoopla also says that the average five-year fixed mortgage rates have increased from below 4% in January to around 4.8%, reducing household buying power by 9%.

Someone previously able to afford a £200,000 mortgage with unchanged monthly repayments could now borrow about £182,000 on the same basis.

The average mortgaged buyer would need to add £18,200 to their deposit to offset the higher borrowing cost.

That figure rises to £35,500 in London, while purchasers in the North East require an extra £10,200.

Searches recover nationwide

The annual increase in property searches was strongest in the South East at 8.9%, followed by the East of England at 8.5%.

The North West recorded the smallest rise, at 0.7%.

Buyer enquiries and agreed sales have yet to match the improvement in search activity, which will take time to move through the market.

New listings are close to last year’s level, while the total stock of homes available has increased by 5%.

House prices cool

The platform’s house price index also shows that house price growth slowed to 0.9% in July, compared with 1.3% in June, with the average property valued at £272,800.

Prices fell by 1% in London, 0.4% in the South West, 0.3% in the South East and 0.1% in the East of England.

The North West recorded annual growth of 3.1%, while prices increased by 2.8% in Scotland and 2.5% in the North East.

Northern Ireland posted the largest increase at 5.4%, although this was below the 7.6% recorded a year earlier.

The property sector reacts to Zoopla’s house price index

Tom Bill, the head of UK residential research at Knight Frank, said: “The autumn bounce in housing market activity should be more noticeable than it was in the spring, but that’s not a particularly high bar.

“Many mortgage rates are a percentage point higher than they were before the Middle East conflict began earlier this year, but rates appear to have stabilised.”

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “We are starting to see holiday returnees slowly drifting back but the market is not what it was just a few months ago.

“On the ground, modest rises in mortgage costs have reinforced the buyer’s hand and are resulting in lower offers, particularly for flats, many of which have remained unsold for some time.”

Nathan Emerson, the chief executive at Propertymark, said: “These figures suggest buyers are beginning to re-engage with the housing market after a quieter summer, with searches up across every region.

“But renewed interest should not be mistaken for a full recovery in transactions just yet.”