Cash buyers are on track to account for more than one in three house sales in 2023 with the number of mortgaged sales projected to be almost a third lower as higher rates dent buyer confidence and affordability, Zoopla’s House Price Index reveals today.

The number of housing sales completing over 2023 is on track to be a fifth (21%) down on 2022 and the lowest number of sales since 2012.

EVERY 23 YEARS

This is equivalent to the average household moving just once every 23 years – an increase of six years since 2021.

Based on trends for the first half of the year cash sales are predicted to fall just 1% over 2023 compared to 2022 levels.

But the number of mortgaged sales is projected to be almost a third (28%) lower, with the biggest driver of this drop in sales a direct result of higher mortgage rates.

Existing homeowners using a mortgage typically account for a third of annual sales with this group more likely to wait until the outlook for mortgage rates improves. As a result, new sales of three and four bed homes are down by up to 40% in July compared to the same period over the last five years.

New buy-to-let purchases are also being squeezed by higher mortgage rates too.

IMPROVE AFFORDABILITY

While mortgage rates have been falling but Zoopla says they need to fall below 5% to improve affordability and stimulate more home moves.

Richard Donnell, Executive Director at Zoopla, says: “Prices are falling more in southern England where higher mortgage rates have priced more people out of the housing market.

“While UK house prices are 0.1% higher over the year, it is the number of sales that have been hit hardest by higher borrowing costs, especially amongst mortgage reliant buyers.

“Cash buyers are more immune and on track to account for more than one in three sales in 2023.

“Mortgage rates need to fall below 5% before we see an increased appetite to move home in the second half of 2023.”

MORE CAUTIOUS

Matt Thompson, head of sales at Chestertons, says: “With the Bank of England confirming the 14th consecutive rise in interest rates in a row at the start of August, buyers have been more cautious and are in some cases pausing their property search in order to adjust their finances.

“However, there still are buyers who have already locked in a mortgage rate with their lender and are keen to secure a property before the rate expires.”

And Carl Jenkinson, Director at County Durham-based Venture Properties, adds: “We are still seeing strong activity in the market despite some turbulent months due to mortgage rate increases, which has in turn made some clients more cautious.

“However, our prices have now stabilised with a little more competition on the market, and our location is still seeing great signs of growth with buyers thanks to continued investment from employers and companies relocating to the North.”