Buyer demand had been running below last year’s levels throughout the first three months of the year but weakened further in the final month of Q1, declining by 13% year-on-year.
Depending on location, enquiries have fallen by 7% to 19% year-on-year, with the largest declines in active buyers recorded in the North East and West Midlands. However, enquiries in these regions are falling from a higher base.
Committed buyers save sales
A slight decline in agreed sales of 2% shows the market is being driven by a smaller pool of committed buyers, according to Zoopla. These are buyers with mortgage offers agreed and/or a clear need to move who are continuing to support the number of sales agreed.
A modest decline in sales agreed can be found in the Northern regions of England, while flat or slightly higher levels of activity can be seen in regions such as Wales, Yorkshire and the Humber and London compared to last year.
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At the same time, the overall number of homes for sale has increased by 6% year-on-year, reflecting a continued desire among homeowners to move despite the more uncertain backdrop, said the portal.
A significant proportion of transactions are also less sensitive to rising mortgage rates. Average mortgage rates have risen to 5.5%, according to Moneyfacts, as lenders react to rising swap rates and rapidly reprice deals.
Around a quarter of sellers own their homes outright, however, while many existing homeowners have built up equity and secured borrowing in advance, reducing the impact of higher mortgage rates. This is helping to support sales in the short term, but also highlights growing reliance on less mortgage rate-sensitive buyers.
House prices hold
Overall, UK house price inflation is holding steady at 1.3% year-on-year, with little immediate impact from the recent weakening in buyer demand. Price trends remain uneven across the country. Growth is strongest in more affordable areas, with the North West recording annual growth of 3.5%, though price falls across Southern England have moderated in recent months despite a softening in demand.
Zoopla does not expect house price growth to slow in the near term, although this depends on demand remaining stable in the coming months. A pricing impact would require a more sustained decline in buyer activity and sales volumes, meaning current growth rates are set to continue.
Richard Donnell (pictured), executive director at Zoopla, said: “Some early-stage buyers are adopting a wait-and-see approach, but there is a sizable group of committed buyers who are pressing ahead with housing purchases.”
