According to Zoopla, home prices have increased by 4.1% over the past 12 months

According to Zoopla, home prices have risen 4% in the last year — but they’ve fallen over the past three months

  • Prices have fallen 1% since October as affordability has stretched
  • The first three months of 2023 saw the lowest quarterly house price growth since 2011
  • According to Zoopla, the market is experiencing a “soft price adjustment”

House prices rose 4.1 percent last year, according to Zoopla’s latest home price index, but they’ve fallen 1 percent since October, showing the impact of higher mortgage rates on the market.

Prices have fallen 0.7 percent in each of the past three months — the largest drop in a single three-month period since 2011.

According to the real estate portal, however, demand for home purchases was 16 percent higher than at the same time in 2019 – the last comparable period before Covid.

The number of agreed new sales has also increased, increasing by 11 percent compared to 2019.

Despite ongoing affordability pressures, the housing market remains resilient in the first half of 2023

Despite ongoing affordability pressures, the housing market remains resilient in the first half of 2023

Zoopla expects 1 million completed property sales in 2023 – more than in the previous year.

Its Executive Director – Research Richard Donnell says the housing market continues to experience “soft pricing” but that market conditions are better than many expected.

There is also a greater supply of homes on the market, up 65 percent from a year ago, as the average real estate agent has 25 homes for sale, compared to 14 in 2022.

This may be good news for buyers, as a property undersupply was one of the factors that drove prices up last year.

Zoopla says sellers must be willing to price their properties reasonably, and possibly make modest discounts, if they’re serious about moving.

On average, sellers are currently accepting discounts of 4 per cent off the asking price – about £14,000 on average, it said.

However, due to the sharp rise in mortgage rates late last year, buying a home is still less affordable for many.

The average homebuyer has 20 percent less purchasing power than a year ago, which means they’re looking for better value by choosing cheaper areas, smaller homes or opting for larger deposits to lower their mortgage costs, he said Zoopla.

On average, Zoopla sees a 5 percent increase in revenue share at the low end of the market and a 4 percent decrease at the high end of the market.

In October 2022, average fixed-rate mortgage rates peaked at 6.65 for a five-year term and 6.52 for a two-year term. According to Moneyfacts, five-year fixed rate contracts now average 5.04 percent. The average two-year fixed rate is now 5.35 percent.

Housing price growth in the cities has slowed – from a double-digit figure to just 6% last year

Housing price growth in the cities has slowed – from a double-digit figure to just 6% last year

This means someone taking out a new £200,000 mortgage today on a two-year, 25-year fixed contract would typically pay £143 less a month than someone fixing in October.

Before then-Chancellor Kwasi Kwarteng’s mini-budget on Friday, September 23, the average two-year fixed rate was 4.74 percent and the five-year fixed rate was 4.75 percent.

‘This is clear evidence of continued demand from first-time buyers or second-time buyers. It also signals more caution on the part of existing homeowners,” Donnell said.

“Upgrading to a larger home will cost a lot more in mortgage costs, and homeowners may be waiting to see what happens to the economy before entering the market.”

Real estate price growth has also fallen sharply in major cities, falling from double-digit last year to just 6 percent now.

The weakest annual growth has been in London, where higher mortgage rates are hitting demand in higher quality markets more.

Best Mortgages

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed-rate deal is expiring or because they have agreed to buy a home should evaluate their options as soon as possible.

This is Money’s best mortgage rate calculator, powered by L&C and able to show you quotes that match your mortgage and property values

What if I need a debt restructuring?

Borrowers should compare interest rates and speak to a mortgage broker and be prepared to bargain to secure an interest rate.

Anyone with a fixed income deal that’s ending within the next six to nine months should assess how much it would cost them to refinance now — and consider starting a new contract.

Most mortgage deals allow fees to be added to the loan, which are then only charged upon closing. This allows borrowers to secure an interest rate without having to pay expensive brokerage fees.

What if I buy a house?

Those who have agreed to buy a home should also aim to secure the installments as soon as possible so they know exactly what their monthly payments will be.

Homebuyers should be wary of overstretching and be prepared for the possibility that home prices could fall from their current high levels as higher mortgage rates limit people’s ability to borrow.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to speak to a good broker.

You can use our best mortgage rate calculator to find offers that match your home value, mortgage size, term and fixed rate needs.

Note, however, that interest rates can change quickly. So if you need a mortgage, you should compare rates and then speak to a broker as soon as possible so they can help you find the right mortgage for you.

> Check out the best fixed-rate mortgages you can apply for According to Zoopla, home prices have increased by 4.1% over the past 12 months

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