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.

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