Buyers return to housing market as searches rise 7%: Zoopla – Mortgage Strategy

Home buyers are returning to the housing market after a summer slowdown, with searches for properties on Zoopla up 7% year on year over the past four weeks.

The increase is the first time in a year that searches have risen across every UK region, signalling the start of an autumn rebound despite continuing affordability pressures. The South East recorded the strongest growth at 8.9%, followed by the East of England at 8.5%, while searches in the North West increased by 0.7%.

However, higher mortgage rates have reduced buyers’ purchasing power. Average five-year fixed rates have risen from below 4% in January to around 4.8%, meaning someone previously able to borrow £200,000 while keeping their monthly repayments unchanged could now borrow only around £182,000.

Zoopla estimates the average buyer would need an additional £18,200 in deposit funds to offset the impact of higher rates and keep monthly mortgage payments unchanged. In London, the figure rises to £35,500, while buyers in the North East would need an additional £10,200.

Sales agreed remain 6% below last year, although the gap is beginning to narrow as activity picks up. Meanwhile, the supply of homes remains relatively strong, with the total number of properties for sale 5% higher than a year ago.

The additional choice is helping to keep price growth subdued. Annual house price inflation slowed to 0.9% in July, down from 1.3% in June. Prices fell by 1% in London and 0.3% in the South East, while the North West recorded 3.1% growth.

Richard Donnell, executive director at Zoopla, said buyers had taken a “wait and see” approach over the summer but were now assessing their options ahead of an expected autumn increase in market activity. Mortgage rates have stabilised, he said, but remain close to 5%, keeping affordability a key consideration.

North London estate agent Jeremy Leaf said: “We are starting to see holiday returnees slowly drifting back but the market is not what it was just a few months ago.

“On the ground, modest rises in mortgage costs have reinforced the buyer’s hand and are resulting in lower offers, particularly for flats, many of which have remained unsold for some time. On the other hand, only relatively few sellers are recognising the new realities and negotiating as hard as they can to try to agree terms at what they regard as realistic.

“We know too, that listings will increase over the next few weeks bearing in mind a recent rise in appraisals which will further strengthen buying power.

“Looking forward, we don’t anticipate much change as speculation about potential Budget tax increases intensifies.”