Residential property price growth has dropped as buyers have a growing choice of homes for sale, Zoopla’s latest House Price Index has revealed.
UK house price inflation has slowed to 1.4%, down from 2% earlier this year with home values falling in parts of London and southern England. The average UK house price is £268,400, which is £3,960 higher than a year ago.
According to the data, the average estate agent has 37 homes for sale, compared to 32 last year. More sellers means more buyers, which is supporting a 6% increase in sales agreed compared to a year ago.
The growth in the number of homes for sale over the last year varies across the country. There is a clear link between house price growth and the change in the number of homes for sale over the last year, with lower price growth in markets which have seen the greatest increase in homes for sale. This boosts choice, re-enforcing the buyers market.
In London, the South East and South West regions of England the number of homes for sale is 16-19% higher than a year ago, while house prices are barely rising, with under 0.5% growth over the last year.
In contrast, northern regions, the West Midlands and Scotland have registered a smaller increase in supply, creating an element of scarcity and driving above-average price growth of 2% to 3%.
Table 1: House price growth held back where buyers have greatest choice
House price falls persist in higher value markets, while affordable areas see growth
Affordability and the level of house prices are also important factors impacting price growth. The higher the price the greater the income needed to buy. The latest Zoopla House Price Index shows there are modest house price falls (-0.2%) in areas with an average property value of over £500,000.
These markets account for eight per cent of UK homes and are concentrated in pockets in inner London and southern England. Prices are over one per cent lower over the last year in the West Central London (WC, -4.3%) and West London (W, -1.3%) postal areas alongside Torquay (TQ, -1.7%) and Truro (TR, -1.3%) in the South West.
Table 2: House prices falling in higher-value housing markets
In contrast, house prices are 2.7% higher in more affordable markets with average house prices below £200,000, and 1.9% higher in markets priced between £200,000 and £250,000. Together, these markets cover 50% of homes.
House price growth is currently fastest, at over 3.5% per annum, in parts of the North West of England and Scotland including Wigan (WN, 4.3%), Falkirk (FK, 3.8%) and Blackburn (BB, 3.6%) postal areas.
In addition to affordability factors, tax and policy changes aimed at second homeowners and landlords are leading to weaker demand and more sales by these owners, which is compounding the impact on house price growth at a localised level.
Sellers need to be realistic on pricing if they are serious about finding a buyer and moving home in 2025. The average time to sell is 45 days, broadly in line with this time last year. This ranges from 35 days in the North East to 57 days in Wales, while all the southern regions in the UK average over 50 days due to a greater choice of homes for sale.
Over one in five homes (22%) currently listed for sale have been on the market for over six months and remain unsold, while just under a quarter (23%) have been on the market for three to six months and are yet to find a buyer. The average time on the market for an unsold home is 75 days.
Many sellers have a price in mind that they want to secure a sale for their home, or a price they need to achieve in order to unlock their next home move. They may eventually get this price but may have to wait a long time to achieve it. Ultimately it is choice for sellers between prioritising a specific sale price or setting a realistic price and agreeing a sale in a timely manner, according to Richard Donnell, executive director at Zoopla.
Hesaid “The number of buyers and sellers agreeing home sales continues to increase year-on-year, demonstrating a continued desire of more households to move home in 2025. Improving mortgage affordability will support buying power in the second half of the year.
“However, buyers remain price-sensitive, especially in higher-value markets where the number of homes for sale has grown the most in the last year, boosting choice for home buyers. Serious sellers need to be realistic on where they set their asking price in order to achieve a sale and secure a home move in 2025.
“The market remains on track for 5% more sales in 2025 but house price inflation will remain between 1% and 2%.”
Read the orginal article: https://propertyindustryeye.com/house-price-growth-slows-as-market-loses-momentum/
