House price falls spread across UK as mortgage rates bite – Zoopla

House price falls spread across UK as mortgage rates bite – Zoopla

0:01 AM, 30th October 2023, About 9 months ago 1

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Higher mortgage rates and cost of living pressures have caused house prices to fall in four out of five local markets in the UK, Zoopla reports.

According to its latest House Price Index, annual house price growth has slowed from +9.2% a year ago to -1.1% today, the most dramatic slowdown since 2009.

House price falls, which were previously concentrated in Southern England, are now affecting lower-value markets as well.

The largest annual falls were registered in commuter towns around London and across the South East, such as Colchester (-3.5%) and Luton (-3.3%).

The highest annual growth rate was +3.6% in Halifax, Yorkshire.

‘House prices have proven more resilient’

Zoopla’s executive director, Richard Donnell, said: “House prices have proven more resilient than many expected over the last year in response to higher mortgage rates.

“However, almost a quarter fewer people will move home due to greater uncertainty and less buying power.

“Modest house price falls over 2023 mean it’s going to take longer for housing affordability to reset to a level where more people start to move home again.”

He added: “Income growth is finally increasing faster than inflation, but mortgage rates remain stuck around 5% or higher.

“We believe that house prices will post further small falls, averaging 2%, over 2024 with 1m home moves.

“Slow house price growth and rising incomes over the next 12-18 months will improve affordability to levels last seen a decade ago, creating the potential for a rebound in home moves as consumer confidence returns.”

Number of house sales has dropped by 23%

Zoopla said that the number of house sales has dropped by 23% in 2023 compared to 2022, due to weaker demand and reduced buying power.

It expects housing transactions to stay flat at 1m in 2024, unless mortgage rates drop back towards 4% over the first half of 2024.

The report also highlights the rise of cash buyers, who will account for one in three sales this year, up from an average of one in five over the past five years.

Many cash buyers are also mortgage-free sellers who have lived in their homes for many years and are more realistic on price.

Rising rents are forcing FTBs to buy

First-time buyers are on track to be the largest buyer group in 2023 – rising rents are forcing them to buy – followed by cash buyers.

Zoopla says that lower mortgage rates would bring more upsizers to the market next year and support overall sales volumes.

The platform also warns that housing affordability needs to improve to price more buyers back to the market and support more sales.

However, UK house prices have fallen less than expected over 2023 and purchasing a property still remains relatively expensive for an average household.

Zoopla expects house prices to fall by 2% over 2024, with faster growth in incomes steadily improving affordability.

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9:17 AM, 30th October 2023, About 9 months ago

In the words of Bachman-Turner Overdrive, I fear…

You ain’t seen nothing yet.

At least IHT won’t be the problem I thought it would be.

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