Prices slump in London and South East, reports Zoopla

Four out of five homes in London and the South East are suffering price drops, the latest Zoopla HPI reveals.

At the same, more than a third of properties across the country as a whole are in postcode areas where house prices are falling, up from just 12% a year ago.

Zoopla says reform of the 5% Stamp Duty band in Wednesday’s Budget would support the market in southern England, while the Your First Home scheme could help up to 10% of first-time buyers.

Sales fall

Outside of London and the South East, house prices have risen, and the North West is leading with averages £6,600 higher.

Home sales overall have fallen 7% during the past year, with supply increasing by 7% i the same period.

The extra cost of mortgages has made home buyers more selective.”

Richard Donnell, Executive Director at Zoopla (pictured), says: “The extra cost of mortgages has made home buyers more selective while greater choice of homes for sale has increased the scope to negotiate on price.

“The impact is being felt by sellers in southern England where house price falls are most concentrated as average prices continue to rise across the rest of the country.

“There is still demand to buy homes, and those that are well priced and presented are selling just as quickly as last year.”

He adds: “The biggest boost the Budget could provide to the housing market would be to create the conditions for lower mortgage rates. We expect activity to strengthen once mortgage rates start moving back below five per cent.”

Industry reaction

Tom Bill, Head of UK Residential Research at Knight Frank, says: “Sellers increasingly need to reflect the tougher mortgage rate landscape when setting asking prices.

“Buyers’ budgets are being squeezed as the Middle East conflict sends borrowing costs higher, but the overall number of mortgage approvals has also fallen, which has weakened demand further.

“Price growth has effectively ground to a halt this year and we expect the downward pressure to continue in the final months of the year, which may be aggravated by this week’s Budget.”

Nathan Emerson, Chief Executive at Propertymark, says: “The housing market is becoming increasingly localised, with higher mortgage costs putting pressure on affordability, particularly in southern England.

“While increased choice is giving buyers greater scope to negotiate, realistic pricing and informed advice from property professionals remain essential to achieving successful sales.

“Despite regional price falls, demand remains, but buyers are increasingly selective and focused on value. Ultimately, market confidence will depend on improved affordability, access to suitable housing and the ability of buyers and sellers to move with confidence.”

Healey to make more first-time buyers eligible for help