According to the latest Zoopla figures, the quarterly growth rate has been negative for the last three months and is the weakest rate of quarterly growth since 2011.
The firm added that the annual rate of growth had fallen in major cities, with growth coming to six per cent now compared to double digit growth a year ago.
The company noted that there had been a one per cent contraction in house prices since October last year.
Zoopla said that coming to the end of the first quarter of this year, the housing market was “in better shape” than predicted at the end of last year, and the market was “more in balance” now than it had been in the last three years.
“The market is going through a soft repricing process with modest quarter-on-quarter price falls across all regions and countries of the UK. The positive news is that buyers and sellers are agreeing deals which are supporting sales activity. In turn, it drives business plans and revenues for agents, lenders and builders,” it said.
The company said that the shift towards lower mortgage rates had “improved market activity”, and mortgage rates could fall below four per cent by the end of the year.
Demand has rebounded but sales agreed reports fall
Zoopla said that demand for new homes had reached its highest level since October last year, which was negatively impacted by the mini Budget.
The firm said demand was 16 per cent higher than this time in 2019.
It said all areas were registering an improvement but there was above-average demand in Scotland, Wales, North East and London.
Demand is weakest where prices increased the most over the pandemic, i.e. where house prices are higher than the national average. This includes part of Southern England and the Midlands.
Sales agreed were 16 per cent lower than this time last year, but is 11 per cent up on 2019 levels and on an “upward trajectory”.
The firm said the supply had improved, with 65 per cent more homes for sale than a year ago.
The average estate agent has 25 homes available compared to a low of 14 homes last year.
“This is a positive change and improves buyer choice meaning sellers need to price sensibly if they are serious about moving,” it noted.
The company added that sellers were making “modest downward adjustments” to asking prices, with the average discount coming to four per cent or £14,000.
The time to sell a home, from being listed to going under offer, has increased by nearly three quarters to 15 days since this time last year.
The time to sell remains beneath 2019 levels. Scotland has the shortest sales period at 28 days and London has the longest at 44 days.
Average homebuyer’s buying power 20 per cent down
The firm said that while mortgage rates had fallen the average homebuyer had 20 per cent less buying power than a year ago.
“This doesn’t mean average house prices need to fall by this much. However, it does mean buyers are seeking out better value-for-money areas, smaller homes or supporting their purchases with larger deposits,” it said.
It noted that there had been an increase in the share of sales in the cheapest 40 per cent of the market by price, and there had been a fall at the higher priced end of the market.
On average, we are seeing a five per cent increase in the share of sales at the lower end of the market and a four per cent fall at the top end.
Zoopla said that there was continued demand from first-time buyers and second-steppers and it could be a signal of more “caution” from existing homeowners.
The company said that it expected first-time buyer numbers to “hold up” this year as some could seek smaller homes and better value for money.
It added that as mortgage repayments were below rental costs in many regions getting a deposit would “remain the big hurdle”.
Around a million transactions expected this year
Zoopla noted that it expected to see one million in sales transactions this year, with half a million taking place in the first half of this year. The firm said this was above the years following the global financial crisis.
Zoopla continued that there was “no evidence of a major mismatch” between buyers and sellers, so it was less likely house prices and transaction volumes would suddenly fall. It added that markets with the “best affordability” will “continue to attract demand” and “above-average sales”.
“The onus on all sellers is to make sure pricing aligns with buyers’ expectations. If you are serious about moving, you simply cannot afford to over-price your home,” it noted.
