top of page
  • Mal McCallion

UK home sales hit decade low, Zoopla reports

Updated: Nov 2, 2023

2023 sees UK home sales plummet, with soaring mortgage costs deterring buyers.


The UK housing market is bracing for a chilly season as home sales for 2023 are predicted to plummet to the lowest level in over a decade. The culprit? Skyrocketing mortgage costs that are making potential buyers think twice.

According to a report from property website Zoopla, completed house sales are anticipated to drop by 21% year-on-year, rounding off at approximately 1 million. This marks the lowest level since 2012.

The culprit behind this slump? A steep increase in mortgage interest rates, which has put a damper on the buying spirit. Nationwide reported that annual house prices took a 3.8% tumble in July, the steepest drop in 14 years. This dip is directly linked to the increased interest rates, which have made securing a mortgage a less attractive prospect for potential buyers.

The report further forecasts that house sales backed by mortgages will see a 28% decrease this year. Cash sales, however, seem to be holding their ground, with a predicted drop of only 1% in 2023.

The average rates for a typical two-year fixed mortgage and a five-year fix were 6.73% and 6.21% respectively, as of Tuesday. Zoopla suggests that these rates need to fall below 5% to stimulate a renewed interest in home buying in the latter half of 2023.

Over the past month, demand for homes has been 34% lower than the average for the same period over the last five years. The report also highlights that renting is, on average, 10% cheaper than making mortgage payments, despite the recent surge in rental rates. The affordability crisis is hitting the southern parts of England the hardest, where house prices are at their peak. Here, buyers need larger mortgages, bigger deposits, and higher incomes to purchase a property. However, more affordable regions like parts of Scotland are faring better.

Zoopla predicts these trends will continue throughout 2023 and into 2024. However, it's not all doom and gloom. The report also notes that affordability is improving relative to earnings, with wages up 7% over the last year. The UK house price-to-earnings ratio is expected to align with the 20-year average by the end of this year, standing at 6.3.

So, while the housing market may be in for a bumpy ride, there's hope yet for potential buyers. With wages on the rise and the possibility of mortgage rates falling, the dream of owning a home may still be within reach for many.


Made with TRUST_AI - see the Charter: https://www.modelprop.co.uk/trust-ai

8 views0 comments

Recent Posts

See All

Comments


bottom of page