The BBC has this week reported a notable shift in the housing market, with many sellers finding it harder to secure buyers. It’s important for anyone considering buying or selling property in the current climate to consider the underlying causes.
Slower Sales and Reduced Demand
Current data suggests that around three in five properties listed for sale since the start of the year remain unsold. At the same time, agreed sales are approximately 7% lower than last year, with some regions experiencing even sharper declines.
This slowdown is largely being driven by weakened buyer demand, meaning sales transactions are taking longer to progress and complete.
The Impact of Mortgage Rates
A key factor is the rise in mortgage costs. Earlier this year, following commencement of hostilities between the USA and Iran, interest rates rose sharply, pushing up monthly repayments:
-
Typical mortgage payments increased by around £125 per month at peak level
-
In London, first-time buyers saw increases of up to £232 per month
Although rates have begun to ease slightly, borrowing remains significantly more expensive than in previous years. This, as well as the significant increases in household and vehicle fuel costs, has had a direct effect on lenders’ affordability calculations for buyers.
First-Time Buyers Under Pressure
First-time buyers have been particularly affected, as they are more reliant on mortgage finance. Reduced affordability has contributed to a 15% drop in buyer demand compared with a year ago. This is especially evident in smaller properties, where two-thirds of one- and two-bedroom flats remain unsold.
Pricing and Market Realities
From a practical standpoint, one of the clearest messages emerging from the market is the importance of pricing:
-
Properties priced realistically are still selling
-
Overpriced homes are more likely to remain on the market
For sellers, this means expectations may need to be adjusted to reflect current market conditions.
Regional Differences
The housing market is not uniform across the UK:
-
Areas such as Wales and the East Midlands have seen more significant declines in agreed sales
-
Northern England and Scotland have shown greater resilience, partly due to lower relative borrowing costs
This reinforces the need for localised advice when selling, particularly when choosing an estate agent.
Wider Economic and Regulatory Factors
Mortgage rates are only part of the picture. Other contributing factors include:
-
Ongoing economic uncertainty affecting buyer confidence
-
Regulatory changes in the rental sector, increasing available housing supply
-
Tax considerations impacting higher-value and second property transactions
Together, these have shifted the balance between supply and demand.
What This Means for Buyers and Sellers
For Sellers
-
Expect longer marketing periods
-
Ensure pricing reflects current conditions
-
Be prepared for negotiation
For Buyers
-
There may be more choice in the market
-
Sellers may be more flexible on price
-
Mortgage affordability remains the key constraint
Encouragingly, there are early signs that the de-escalation of hostilities in the Middle-East and its impact on oil prices means that mortgage rates are likely to fall further. Combined with increased lender competition this could improve market conditions. Unfortunately, this can sometimes take time to take effect.
Final Thoughts
While the housing market has slowed, it has not stalled. Transactions are still proceeding, albeit more cautiously and slowly.
From a legal perspective, it is crucial for both buyers and sellers to plan for longer timelines, understand the full range of costs involved with moving house, secure finance early, and seek professional advice at each stage to minimise risk, delay and unplanned expenses.
Contact a Conveyancing Solicitor or Get a Quote Today
If you’re looking to buy or sell a property, contact our experienced conveyancing team today on 01254 606008, by email, or through our online chat below. Alternatively, you can get an instant quote from our quote generator.
