Political uncertainty and higher borrowing costs have led to a 15% year-on-year fall in buyer demand across the UK, according to Zoopla’s latest House Price Index.
A change of Prime Minister and uncertainty ahead of the Autumn Budget have added to the slowdown, with sales agreed now 7% below last year’s levels.
Three in five homes listed for sale since January remain on the market, with Zoopla drawing comparisons with the 2022 mini-Budget period, which triggered a fall in sales agreed of more than 20% before the market recovered as mortgage rates stabilised.
North – South divide
Mortgage rates, which reached 5% in April, have added around £125 a month, or £1,500 a year, to the average mortgage, according to Zoopla.
First-time buyers (FTBs) in London have seen monthly costs increase by £232, compared with £66 in the North East.
Although mortgage rates have since eased to 4.8% in May, Zoopla said borrowing costs will need to fall further to support affordability and activity in the second half of 2026.
While sales agreed have fallen across the UK, there have been smaller declines in northern regions and Scotland (down 3–6%) due to tighter supply and less severe mortgage pressures.
Larger falls were recorded across Wales (12%), the East Midlands (11%), and the East of England and South West (both 10%).
London was down 9%, while the West Midlands fell 8% and recorded the sharpest drop in buyer demand, down 30% year-on-year.
Two- and three-bedroom houses continue to sell broadly in line with last year, but flats remain under pressure, with more than two-thirds of listings unsold. Zoopla said this reflects weaker demand, particularly in London, where buyers also face Stamp Duty costs of around 3%, compared with less than 1% in northern England.
House prices
House price inflation has eased to +1.4% year-on-year. The North East and North West remain the strongest-performing regions in England, both up 3.5%, while Scotland is also up around 3% on limited supply.
At the other end of the market, London has seen nine consecutive months of annual price declines (-0.2% in May), while the South East is also negative at -0.3%, underlining the importance of accurate pricing in weaker southern markets, says Zoopla.
Richard Donnell, executive director at Zoopla, said: “Higher mortgage rates have hit sales and squeezed affordability for home buyers alongside increased political uncertainty. The impact is less severe than what the market faced after the 2022 mini-budget, and mortgage rates have started to fall.
“It’s a buyer’s market across much of the South right now, but motivated sellers in northern England and Scotland are still finding buyers at broadly last year’s pace which shows the housing market is not moving at one speed.”
He added; “The national picture can only tell you so much, and local market conditions vary considerably across the country. The most important step, whether you are buying or selling, is speaking to a local agent who knows what is actually happening on your street.
“For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting. For buyers, rates are falling, there is more choice of homes for sale than a year ago and motivated sellers are willing to negotiate. If you are ready to move, conditions are more favourable than they were three months ago.”
New normal
Commenting on the findings, Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “A combination of too much property on the market across various price ranges, as well as continuing uncertainty about the protracted war in Iran and the subsequent impact on the economy, is proving lethal as far as homebuyer and seller confidence is concerned.
“Sales are taking much longer and it is proving increasingly difficult to generate commitment. However, the overwhelming majority of sales which have been agreed are proceeding, although inevitably more slowly and suffering relatively few price negotiations.
“This is likely to prove the ‘new normal’ at best, looking forward, particularly now that domestic political uncertainty is another factor to consider.”
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