Buyer demand has dropped 15% compared to this time last year, with sales agreed falling 7%, Zoopla’s May house price index reveals.
After months of cautious optimism, higher borrowing costs and ongoing political uncertainty are now having an unmistakable impact on the housing market, with three in five homes listed since January still on the market.
A change of prime minister and questions over future tax and spending priorities in the autumn budget have added to the uncertainty, Zoopla said.
The steepest decline in demand has been seen in the West Midlands, where demand fell by 30% year-on-year and sales agreed are down 11%. Wales saw the largest drop in sales agreed, down by 12%.
London is facing its ninth consecutive month of negative annual house price growth, sitting at -0.2% in May. The South East follows closely behind at -0.3%.
However, Zoopla points out that the market has absorbed similar levels of economic and political uncertainty in recent years and recovered well, with the 2022 mini budget triggering a sharp fall in sales of agreed and recovering when mortgage rates stabilised.
“Higher mortgage rates have hit sales and squeezed affordability for home buyers alongside increased political uncertainty”, Zoopla executive director Richard Donnell explained.
“The impact is less severe than what the market faced after the 2022 mini-budget, and mortgage rates have started to fall.
“It’s a buyer’s market across much of the South right now, but motivated sellers in northern England and Scotland are still finding buyers at broadly last year’s pace which shows the housing market is not moving at one speed.
“The national picture can only tell you so much, and local market conditions vary considerably across the country.”
Looking ahead, Zoopla expects sales agreed to be 6-8% lower than last year, at 1.1 million completions.
“With sales in H2 2025 suppressed by autumn budget speculation, the year-on-year comparison is likely to narrow through Q3 and Q4 even without a significant recovery in buyer demand and sales,” the report notes.
“At the start of the year, we expected sales would be 2% below their high of 2025. This gap will be wider on the back of higher borrowing costs reducing sales activity.”
Chris Hodgkinson, managing director of House Buyer Bureau, said: “While market conditions have undoubtedly become more challenging, we’re far from seeing the sort of freeze witnessed after the 2022 mini-budget.
“Buyers are still active, but they’re taking a far more measured approach and won’t be rushed into paying over the odds.”
North London estate agent Jeremy Leaf said the combination of the protracted war in Iran and too much property on the market is “proving lethal as far as homebuyer and seller confidence is concerned.”
He added: “Sales are taking much longer and it is proving increasingly difficult to generate commitment. However, the overwhelming majority of sales which have been agreed are proceeding, although inevitably more slowly and suffering relatively few price negotiations.
“This is likely to prove the ‘new normal’ at best, looking forward, particularly now that domestic political uncertainty is another factor to consider.”
For Nathan Emerson, CEO of Propertymark, the picture is slightly less pessimistic.
“Economic and political uncertainty will always influence confidence, but people continue to move because of changing jobs, growing families, retirement and other life events that cannot simply be put on hold indefinitely,” he pointed out.
“Property professionals are continuing to see healthy levels of enquiries and viewings, but many buyers are taking longer to commit and are carrying out more research before making an offer. Confidence has softened rather than disappeared, making realistic pricing and expert local advice more important than ever.
“Today’s figures also reinforce that there is no single national housing market. Conditions vary considerably from one area to another, and local agents play a vital role in helping buyers and sellers navigate changing market conditions and keep transactions progressing.”
