The Zoopla House Price Index revealed that, although there was a 12% uplift in agreed sales compared to this time last year, mortgage repayments were still around 61% higher.
Despite there being a rebound in mortgage approvals for purchase due to settled rates, average pricing remained around 4.5% compared to sub-2% in March 2021.
Zoopla said that the average homebuyer using a 70% loan-to-value (LTV) mortgage would have an annual mortgage repayment of £11,400, up from £7,100 in March 2021 – a 61% difference.
Two-thirds of this increase has been caused by higher mortgage rates, but house prices being 13% higher than they were three years ago had also added to rising costs.
Southern England hit harder
Zoopla’s data showed that the housing markets in the Southern parts of England were most impacted by higher mortgage rates.
On a regional and country level, there has been a 50-70% rise in mortgage repayments for the average buyer since 2021.
In the South West, South East and East of England, the annual cost of mortgage repayments is £5,000 more than in 2021. This rises to £7,500 for the average borrower in London.
Zoopla said the cost of stamp duty was also impacting buyer decisions.
In regions where the increase in mortgage payments is lower, the average ranges from £2,350 to £3,900 more in annual payments compared to 2021.
Zoopla said this explained why market activity and prices were holding up better in more affordable areas.
House price falls in most regions
Zoopla’s data recorded that 64% of homes were still registering annual price falls.
However, this was easing as it was a smaller share than the 82% of homes recorded in October, and declines were only around 0% to -3%.
Price declines were more pronounced in Southern England, where 95-100% of homes in local markets were down on the year before.
The East Midlands was also found to have a high proportion of markets, with price declines at 93%.
The rest of Great Britain showed an improvement in house prices, with an overall smaller share of local markets recording a reduction.
For example, there were no house price falls recorded in Scotland on a national level. Meanwhile, the North East, where homes are the most affordable at an average price of £142,000, also had areas with no annual price falls.
Agreed sales up
An overall improvement in the number of homes for sales and buyer confidence resulted in a 12% rise in agreed sales.
Buyer demand was up by 4%, while there was a 14% increase in the flow of new supply.
According to Zoopla’s data, there were 20% more homes available for sale compared to a year ago.
The firm said the market was on track to see 1.1 million sales completions this year.
Across the UK, Zoopla recorded a 0.2% year-on-year decline in average house prices in March to £264,500.
Richard Donnell, executive director at Zoopla, said: “The rebound in sales being agreed continues for a fourth month as mortgage rates have fallen, consumer confidence improves and homebuyers have much greater choice of homes for sale. The pipeline of sales is growing, and we expect 100,000 more people to move home in 2024 than last year.
“There is clear evidence that house prices are firming and the pace of price falls is slowing. We don’t believe that prices will start to rise as buyers face much higher mortgage repayments than in the recent past. The market is adjusting to higher borrowing costs, and what we need is continued price stability, which will create the environment for continued growth in sales and home moves. It’s important sellers remain realistic on what they can achieve for their home.”
