The UK housing market is experiencing its slowest annual house price growth since 2012, at just 0.1%, according to Zoopla’s House Price Index for August 2023.
On a regional level, Scotland leads with a 1.7% annual increase, while London has seen a 1% decline.
Property sales for 2023 are down by 21% compared to last year. Sales involving a mortgage are expected to drop by 28%, largely due to higher mortgage rates. Cash sales, on the other hand, have remained stable.
Despite the slow growth in house prices, improving wage growth is making houses more affordable. For a rebound in market activity, however, lower mortgage rates will be key, especially looking towards 2024.
The current conditions are making it difficult for first-time buyers, who make up about one-third of annual property sales, to enter the market due to high mortgage rates.
But Richard Donnell, executive director – research at Zoopla, said the market will recover: “Looking ahead, we expect the number of property sales to recover well in the coming 2-3 years.
“More flexible working, demographic trends from an ageing population, the strong labour market and high immigration will all encourage people to move house.
“In terms of mortgage rates, they’re starting to drift lower and we expect them to fall below 5% later this year. But it’ll be a drawn-out process, relying on financial markets to evaluate how high interest rates need to be to bring inflation under control.
“Any falls to mortgage rates are unlikely to impact the market and improve affordability further until at least the first half of 2024.
“This is why we’re less optimistic about house price growth, which looks set to stay within the +2% to -2% range for the foreseeable future.”
