Three in five homes listed for sale since January are yet to find a buyer, according to Zoopla's latest House Price Index, as sales agreed fall 7% year-on-year.
The index also shows that buyer demand has fallen 15% year-on-year across the UK, with political uncertainty and higher mortgage rates hitting buyers differently depending on location.
A jump in mortgage rates in April added £232 to the average first-time buyer's monthly costs in London, but just £66 in the North East, a gap that reflects the differences in market performance seen across the country. Setting the price right from day one has rarely mattered more for sellers hoping to move this year.
Higher mortgage rates and political uncertainty have shrunk the pool of committed buyers, pushing sales agreed to 7% below last year's level. A change of prime minister and questions over future tax and spending priorities ahead of the Autumn Budget have added to the uncertainty.
More buyers are taking a wait-and-see approach until the outlook becomes clearer, though this is not the first time the market has absorbed political and economic shocks: the 2022 mini-budget triggered a sharper fall in sales agreed of more than 20%, with the market recovering once mortgage rates stabilised.
Sales agreed have declined across the UK, but the falls are more modest in northern regions and Scotland, where decreases range between 3% and 6%. Buyers there face fewer homes for sale, with both the North West and Scotland recording a 4% decline in sales stock, and benefit from smaller increases in mortgage repayments than buyers in the South.
Regional performance varies considerably:
- Wales has seen the steepest decline in sales agreed, down 12%
- The East Midlands (-11%), East of England (-10%) and South West (-10%) also rank among the weakest
- London (-9%) and the West Midlands (-8%) sit above the national average
- The West Midlands has recorded the sharpest fall in buyer demand, down 30% year-on-year, closely followed by the North East at -29%
Beyond the regional picture, two and three-bedroom houses are selling at a similar pace to last year across the country, with committed movers continuing to transact. One and two-bedroom flats remain the weakest segment, with more than two-thirds of those listed this year still unsold. First-time buyers are the typical audience for these properties, and the data reflects their exposure to higher costs and a subsequent pullback from the market.
The effect is most acute in London, where a first-time buyer faces not only a larger mortgage but stamp duty costs equivalent to around 3% of the purchase price, compared with less than 1% for a first-time buyer in northern England.
With mortgage rates hitting 5% in April, prospective buyers face an extra £125 a month on top of the average mortgage, adding up to £1,500 a year. The same rate rises are hitting buyers very differently depending on location, which explains why some markets have slowed sharply while others continue to hold up.
London buyers have seen mortgages increase by £244 a month, or £2,900 a year, compared with just £69 a month, or £830 a year, in the North East. First-time buyers have also felt the impact, with those in London seeing a monthly increase of £232, nearly three and a half times the £66 increase facing a first-time buyer in the North East.
Mortgage rates have started to ease, however, edging down to 4.8% in May. The decline in borrowing costs needs to go further to improve affordability and support sales through the second half of 2026.
Fewer sales are beginning to feed into house price inflation, which has slowed to 1.4% year-on-year. The latest figures reflect sales agreed earlier in the year, before the full impact of higher mortgage rates took hold, meaning price inflation looks set to slow further into the autumn unless rates fall further and sales recover.
The North East and North West are currently the strongest performing English regions, with growth of 3.5%, while Scotland is registering growth of 3% amid a continued scarcity of homes for sale. London, by contrast, is facing its ninth consecutive month of negative annual house price growth, sitting at -0.2% in May. The South East is similarly weak at -0.3%, making an accurate asking price the difference between moving and staying put this year for sellers across the South.
"Higher mortgage rates have hit sales and squeezed affordability for home buyers alongside increased political uncertainty," said Richard Donnell, executive director at Zoopla. "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. The most important step, whether you are buying or selling, is speaking to a local agent who knows what is actually happening on your street.
"For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting. For buyers, rates are falling, there is more choice of homes for sale than a year ago, and motivated sellers are willing to negotiate. If you are ready to move, conditions are more favourable than they were three months ago."
Industry reaction
Tom Bill, head of UK residential research at Knight Frank, commented, “A summer of tax speculation could stifle demand in the housing market for the second year running. After the seasonal spring bounce this year was cut short by higher mortgage costs arising from the Middle East conflict, it means buyers and sellers may not get a chance to properly catch their breath.
"The uncertainty is not limited to what will be contained in the Budget, but the identity of the Chancellor and the credibility of wider ambitions to reform property tax, many of which are based on plans that are unachievable for a number of years.”
Nathan Emerson, CEO of Propertymark, said, “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.
“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.“
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says, "A combination of too much property on the market across various price ranges, as well as continuing uncertainty about the protracted war in Iran and the subsequent impact on the economy, is proving lethal as far as homebuyer and seller confidence is concerned.
"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."
Nigel Bishop of buying agency Recoco Property Search, said, “House hunters remain cautious amid the UK’s volatile economy and with interest rates remaining at 3.75%, the market won’t be seeing a spike in buyer activity any time soon. Particularly those who aren’t in a rush to move, will rather wait until the market has stabilised or rates have come down.”
