Three in five homes listed for sale in the UK since January remain unsold, according to property portal Zoopla, as high mortgage rates and stubborn asking prices deter buyers. Agreed sales across the country were 7% below the same period last year, Zoopla reported, with demand from buyers down 15% year-on-year.
Mortgage Rate Shock
A spike in mortgage rates in April, triggered by financial market turmoil linked to the US-Israeli war with Iran, added an average of £125 a month to a typical mortgage at its peak compared with January, Zoopla said. In London, the increase was even steeper: £232 a month added to the average first-time buyer's costs. The average two-year fixed rate jumped from 4.83% at the start of March to a peak of 5.90% on 12 April, according to financial information service Moneyfacts. It has since edged down to 5.54%.
| Metric | Value | Source |
|---|---|---|
| Two-year fixed rate (start March) | 4.83% | Moneyfacts |
| Two-year fixed rate (peak 12 April) | 5.90% | Moneyfacts |
| Two-year fixed rate (current) | 5.54% | Moneyfacts |
| Monthly cost increase (UK avg peak vs Jan) | £125 | Zoopla |
| Monthly cost increase (London FTB peak vs Jan) | £232 | Zoopla |
| Monthly cost increase (North East FTB) | £66 | Zoopla |
Regional Disparities
The national figures mask stark local differences. Zoopla data showed agreed sales 12% lower in Wales and 11% lower in the East Midlands. In contrast, northern England and Scotland saw only modest declines, partly because fewer homes were for sale and the cash increase in mortgage costs was smaller. Richard Donnell, executive director at Zoopla, noted: "The national picture can only tell you so much."
First-Time Buyers and Supply Mismatch
First-time buyers, most exposed to higher borrowing costs, are driving a wedge between property types. Zoopla said two-thirds of one- and two-bedroom flats listed this year remain unsold, while the pace of sales for two- and three-bedroom homes has changed little. The Bank of England reported that mortgage approvals for house purchases fell to a two-and-a-half year low in May as deals were pulled and rates rose.
"For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting." — Richard Donnell, Executive Director, Zoopla
Estate agents report that homes for sale exceed demand across price ranges. Jeremy Leaf, a north London estate agent, said: "Sales are taking much longer and it is proving increasingly difficult to generate commitment." He added that most agreed sales are proceeding, albeit more slowly.
Glimmers of Improvement
Despite the gloomy headline numbers, Donnell pointed to recent mortgage rate cuts as a positive signal. "For buyers, rates are falling, there is more choice of homes for sale than a year ago and motivated sellers are willing to negotiate. If you are ready to move, conditions are more favourable than they were three months ago," he said. The competition among lenders lowering rates may provide a floor for demand, though the impact of geopolitical uncertainty and changing political leadership in the UK continues to weigh on the market.
Sources:
