Zoopla’s March house price index shows a 13% drop in demand compared to this time last year, with “a clear trend” of a growing gap between buyer demand and sales agreed.
Although the market remains active, it is increasingly dependent on a smaller group of committed buyers, Zoopla said.
“We’re seeing a growing divergence between general enquiries and actual transactions,” the online property portal explained. “The ‘wait and see’ crowd is pausing, but serious committed movers are pressing ahead.”
With average mortgage rates up by around 0.4% over March and sub-4% deals withdrawn, further rises could impact sales, Zoopla said.
“Underlying market conditions are shifting. The key question is whether further changes in mortgage rates and the wider economic outlook feed through into weaker demand and sales in the coming weeks.”
For now, sales agreed are proving more resilient, at just 2% lower than last year. The number of sales is 6% higher than the same period last year.
“If mortgage rates stabilise, current levels of sales activity are likely to continue,” Zoopla said. However, further increases in borrowing costs or changing expectations over the cost of living could reduce demand further, with a lagged impact on sales agreed.”
Mary-Lou Press, president of NAEA Propertymark, said Zoopla’s report indicates caution rather than a lack of demand. “Many potential purchasers are taking a ‘wait and see’ approach as mortgage rates fluctuate and global uncertainty linked to the Middle East weighs on confidence.
“Sales continuing to progress shows there is still resilience, but relying on a smaller pool of proceedable buyers can make the market more sensitive to change. Broadening buyer confidence and supporting affordability will be key to maintaining stable activity in the months ahead.”
But for Tomer Aboody, director of specialist lender MT Finance, the figures indicate a wider problem.
“While the average house price remains steady, the fall-off in demand is of far greater importance,” he said. “We have seen a lack of desire from the government to help kick start or boost the property market, and if anything, it has helped create even tougher conditions.
“The property market is the lifeblood of the UK economy, and until it is better supported, we will continue to see not only a stagnant property market, but also a stagnant economy.”
