Lower mortgage rates have increased buyer demand and property sales in the UK, with most sellers accepting discounts of 5% or more to secure a sale.
Zoopla’s latest house price index shows UK house prices rose 0.7% in August to an average of £267,100 as buyers took advantage of the lowest mortgage rates.
Households that were previously hesitant to re-enter the market have seen buyer demand and agreed sales prices surge by more than 25% year-on-year.
The report showed that the increased supply is likely to keep house price inflation in check, as much of the new listings are from homeowners looking to upgrade or relocate. Approximately 37% of deals were completed at 5% or more below the original asking price, reflecting buyers’ price sensitivity as options expand.
Sales activity has increased significantly in various regions, with a 32% increase in the East Midlands and a 30% increase in the North East. Overall, home sales increased by more than 10% nationwide.
This new buyer interest also led to an increase in the number of properties for sale, up 12% as sellers, including homeowners and investors, take advantage of lower mortgage rates and expected tax changes. I did.
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Sarah Coles, personal finance columnist for Yahoo Finance UK and head of personal finance at Hargreaves Lansdown, said: “Owners are buckling down in their rush to replace holiday homes and investment properties.” They are panicking that the budget changes could result in huge taxes being levied on their profits, making real estate investments even less attractive from a tax perspective.
“Fortunately for sellers, this wave of real estate listings does not force prices to fall as demand from buyers is also increasing. But it’s still a buyer’s market, so you can’t afford to overprice your property, especially if you want to sell quickly ahead of potential tax changes.”
A third of homes currently for sale on Zoopla are ‘chain-free’, with two-bedroom homes making up the majority in this category.
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Nathan Emerson, chief executive of Propertymark, said: “We are beginning to see early signs that lenders are gaining confidence to turn the tables by offering mortgage deals for less than 4% in some situations. But this is of course well below the current benchmark rate, which suggests future confidence in the economy.”
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Coastal and rural areas such as Truro (47%) and Torquay (44%) have seen a particular surge in housing supply, with second home owners looking to sell amid impending tax increases. Many local councils are expected to double council tax on second homes by 2025, boosting the flow of property into the market in these areas.
Despite increased economic activity, affordability remains a major barrier to widespread price increases. House prices in London are showing a modest recovery, rising 0.5% after a year of decline, but prices are still reported to be lower in the south-west, south-east and east compared to last year.
Richard Donnell, executive director of Zoopla, commented on the findings: “Lower mortgage rates are bringing much-needed confidence to homeowners, many of whom have been on the sidelines for the past two years. Expectations for borrowing costs to fall as market activity picks up. is likely to continue to attract buyers and sellers.”
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