UK house prices have fallen 1.3% over the last 6 months but the rate of price falls has now slowed.
Activity levels are recovering and more sellers are coming into the market as falling mortgage rates and a strong labour market boost buyer confidence.
And we’re not seeing any evidence of a build-up of unsold homes.
The number of homes listed for more than 90 days in most areas is in line with the 5-year average.
So while new sellers will need to set their asking prices carefully if they are serious about moving, there’s no need for larger price falls to clear stock at this stage.
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The best areas to sell a home right now
Sellers in the North East, Scotland and London are seeing above average activity, with sales levels 10% higher than the rest of the UK.
That’s because the North East and Scotland are both more affordable markets.
And while London isn’t (homes in the capital cost twice as much as those in the rest of the UK on average), its affordability has improved over the last 7 years as prices failed to rise inline with the rest of the UK.
What's happening with house prices?
In fact, house price inflation in London is currently at -0.2% year-on-year.
That means homes are now better value for would-be buyers in the capital, especially those looking to buy flats, since their values haven’t risen since 2016.
Increased migration into the UK is also likely to be supporting above-average demand and sales rates here.
However, it’s a different picture in the South and Midlands, where house prices shot up over the last 3 years. Here demand remains below average.
That’s because higher prices, combined with higher mortgage rates and the cost of living, have taken more buyers out of the market in these areas.
That said, there are still active buyers in these markets, shown by above-average sales, albeit at a lower level.
Higher mortgage rates push landlords to sell-up
Some landlords are looking to sell their properties in the face of higher mortgage rates, which is also adding to the supply of homes for sale.
Some 1 in 10 (11%) of homes listed for sale were previously rented out, a level that peaked at 14% in 2020 and which has drifted lower over the last 3 years.
Ex-rental homes have an asking price that is 25% lower than previously owned homes (£190,000 v £250,000), which makes them appealing to first-time buyers.
What should I do if I’m planning to sell my home this year?
While more sales are being agreed, sellers must remain realistic on pricing to attract buyer interest.
Some 18% of homes currently listed for sale on Zoopla have had their asking price reduced by 5% or more, compared to 28% in February.
Price reductions typically come 8 weeks after a property is first listed, as sellers try to boost interest from buyers.
What’s going to happen to the housing market in the second half of this year?
While demand is down due to rising mortgage rates, lending regulations have helped to temper the impact this has on house prices.
That said, we do expect prices to continue to drift lower throughout 2023.
The increased likelihood of further interest rate rises, meaning higher mortgage rates, is likely to weaken demand and activity in the second half of 2023.
Rising mortgage rates reduce buying power and demand for homes, leading to a downward pressure on house prices.
And the number of home sales taking place in 2023 are on track to be 20% lower than last year.
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