The average price of a residential property in the UK has exceeded £250,000 for the first time, but signs of a slowdown are emerging, according to Zoopla’s latest House Price Index.
The latest property price data shows that the average price of a home has hit £250,200. But the market appears to be slowing as homeowners face increasing pressure on their finances thanks to the surge in cost of living.
Rising house prices paired with increased interest rates mean the cost of repayments for a new mortgage for an average UK home has risen, and is further squeezing households already impacted by the cost of living crisis.
Properties in Wales remain popular with buyers showing the strongest rates of house price growth for the 15th consecutive month at 11.6%, growth in London is lagging with the slowest rate of growth at 3.6%
The housing market is still much busier than pre-pandemic norms, but signs are emerging that a slowdown is coming. House prices may be up an average of 8.4% YoY for April – down from 9% in March, however the rate of house price growth is set to fall to +3% by the end of 2022.
Furthermore, sales are taking longer with nearly all types of property taking a few days more to achieve a sale agreed compared to the month prior.
Outside of London, the average time between listing and sale agreed for a three-bed house is up from 16 days in March to 18 days in April. In London, this figure is up from 17 days in March to 21 days in April.
Price reductions are also rising, with an increased number of properties listed where sellers have cut the asking price by 5%.
Since the second half of April, 5.1% of properties listed for sale had a price reduction compared with 4.7% in the previous 28 days – a pattern seen in every region in Britain.
The average reduction seen is 9% and when applied to the average home value, this equals a price reduction of around £22,500. Regionally, one in 16 properties (6.2%) in the North East have been reduced in price by 5% or more in the four weeks to 15 May, while in the West Midlands, around 4.5% of listings have registered price cuts of 5%-plus.
Zoopla says that the market continues to see a supply-demand imbalance with limited numbers of properties still coming to market.
Current demand sits at +61% based on the five-year average compared with the total supply of homes for sale -37% and driving market competition.
London has the smallest shortfall in stock, at -19% below the five-year average, while demand still remains strong at +55% above the long-term average.
In contrast, buyer demand is strongest in the East Midlands, with the market hugely competitive at +81% above the five-year average, while stock levels remain -32% down.
Gráinne Gilmore, head of research, Zoopla, commented: “High levels of buyer demand mean that the market is still moving quickly, but the time to sell – the time taken between listing a property and agreeing a sale – is starting to rise across most property types in most locations.
“We expect that this measure will continue to rise during the rest of the year as buyer demand levels start to fall, punctured by changing sentiment around the cost of living and personal finances.
“Another signal that the market is starting to soften is the number of properties where asking prices are being cut by more than 5%. Some one in twenty properties has been re-priced this month, with the average new asking prices some 9% below the original.
“The annual rate of price growth will ease this year, on a monthly basis, price growth has already moderated. A continuation of this trend, even with some small monthly declines, means price growth will reach +3% by the end of the year.”