Housing market ‘highly dependent on small number of key buyers’

Domestic consumer demand weakened in March as rising mortgage rates and global uncertainty linked to the Middle East conflict weakened confidence, according to the property website.

Zoopla said agreed sales were down 2% year-on-year, with the market being supported by first-time movers who already have agreed mortgages.

But agreed sales are flat or slightly higher in other parts of the UK, such as Wales, Yorkshire and the Humber and London, compared to last year.

Consumer inquiries were 13% lower than last year as potential buyers used a more cautious “wait and see” approach, the Zoopla report said.

It said consumer demand was running below last year’s levels in the first three months of the year.

The total number of homes for sale increased by 6% year-on-year, reflecting the continued desire among homeowners to move despite the uncertain conditions.

Zoopla said a large portion of transactions are also largely unaffected by rising mortgage rates.

About a quarter of sales are cash purchases, with many homeowners having built up equity and pre-financing, reducing the impact of higher mortgage rates.

This helps support sales in the short term, but also highlights the growing confidence among homebuyers who are not interested in mortgage rates, the report said.

Overall, UK house prices have remained stable, with annual growth of 1.3%.

The increase in price is strongest in the cheapest areas, and in the north-west of England to record an annual increase of 3.5%, Zoopla said.

Lenders are looking to raise mortgage rates and withdraw other products amid changing expectations in financial markets.

Exchange rates, which lenders use to buy loans, are rising.

Richard Donnell, managing director of Zoopla, said: “The market is still working, but it still relies heavily on a small pool of valuable customers.

“Some first-time buyers are taking a wait-and-see approach but there is a large group of committed buyers who are moving forward with home buying.”

Zoopla’s house price index measures the change in house prices where a sale has been agreed.

Data on consumer demand for the four weeks to March 22 compared with a year earlier. Its house price figures cover the period up to the end of February.

Here are the annual changes in home prices, according to Zoopla:

London, minus 0.2%

South East, minus 0.2%

South West, 0.0%

East of England, 0.6%

East Midlands, 1.2%

West Midlands, 1.9%

Wales, 2.1%

Yorkshire and the Humber, 2.2%

Scotland, 2.6%

North East, 2.8%

North West, 3.5%

Northern Ireland, 7.2%