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House prices are continuing to fall, according to a closely watched index, but transactions are ahead of the long-term average due to landlords selling up.
According to estate agent Zoopla, landlord properties accounted for 11 per cent of sales in the last month, as high mortgage rates and energy bills forced many property owners to place their homes on the market as they struggled to make a profit.
While a boost in supply may be welcomed by some, a decision by lenders such as NatWest to raise interest rates on fixed rates mortgages by up to 0.45 percentage points, will make it increasingly difficult for first time buyers to get on the ladder and also limit the number of rental properties available for tenants.
“Sellers shouldn’t get carried away by more positive data on the housing market and need to price their homes realistically if they are serious about moving home in 2023,” Richard Donnell, executive director at Zoopla said.
“Home buyers remain price sensitive with one eye firmly on the outlook for the economy, the cost of living and the trajectory of mortgage rates which appear likely to edge higher in the coming weeks,” Donnell added.
It comes as the average price of a home in the UK has grown by 1.9 per cent year on year, now costing £260k. However, that masks a 1.3 per cent fall over the past six months.
However in London house prices contracted by 0.2 per cent on a year to year basis, with the average price of a home in the capital now costing £523k.
“This demand for London property is caused by the backlog of needs-based buyers who were looking to move following Covid-19, which was so great it has yet to be satisfied, despite the increased cost to buy,” Guy Gittins, chief executive of Foxtons Estate Agents said.
“As well, given the extreme supply and demand imbalance in the lettings market, more renters who are in a position to buy have accelerated their search,” he added.