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Lower mortgage rates have boosted buyer demand and property sales in the UK, with most sellers accepting more than a 5% discount to secure a sale.
UK house prices have risen 0.7% in August to an average of £267,100 as buyers take advantage of the lowest mortgage rates, according to the latest House Price Index from Zoopla.
Buyer demand and sales agreed have surged more than 25% year-on-year, as households that previously hesitated re-enter the market.
The report showed that increasing supply will likely keep house price inflation in check, as many of the new listings are from homeowners looking to upgrade or relocate. Approximately 37% of transactions are occurring at prices more than 5% below initial asking prices, reflecting buyers’ price sensitivity amidst the expanding choices available.
Sales activity has increased significantly across various regions, with the East Midlands experiencing a 32% rise and the North East seeing a 30% increase. Overall, the number of homes sold has risen by over 10% nationwide.
With this renewed buyer interest, the number of properties listed for sale has also seen a boost, climbing 12% as sellers, including homeowners and investors, capitalise on falling mortgage rates and anticipated tax changes.
Read more: When will mortgages get cheaper and is offsetting the answer?
Sarah Coles, personal finance columnist at Yahoo Finance UK and head of personal finance at Hargreaves Lansdown, said: “Owners are falling over themselves in a rush to shift holiday homes and buy-to-let investment properties. They’re panicking that changes that might come through in the budget could saddle them with a huge tax bill on their gains, making property investments even less attractive from a tax perspective.
“Fortunately for sellers, this wave of property listings isn’t forcing prices down, because demand from buyers is on the up too. It’s helping to protect sellers from yet another disappointment in their property investment journey. However, it’s still a buyer’s market, so they can’t afford to overprice their property — especially if they’re after a quick sale ahead of any potential tax changes.”
One-third of the homes currently for sale on Zoopla are “chain-free,” with two-bedroom houses dominating this category.
Read more: How to reduce your capital gains tax bill ahead of the budget
Nathan Emerson, CEO of Propertymark, said: “We are starting to see early signs of lenders having the confidence to shift up the landscape by offering sub-4% mortgage deals in some circumstances, which of course sits firmly below the current base rate and points towards future confidence within the economy.”
Coastal and rural areas such as Truro (47%) and Torquay (44%) are witnessing a particularly sharp increase in housing supply, driven by second homeowners looking to sell amid impending tax hikes. Many local councils are expected to double council tax on second homes by 2025, prompting an influx of properties onto the market in these areas.
Despite the uptick in activity, affordability remains a significant barrier to widespread price growth. While house prices in London have made a modest recovery — rising 0.5% after a year of declines — the South West, South East, and Eastern regions still report lower prices compared to last year.
Richard Donnell, executive director at Zoopla, commented on the findings: “Lower mortgage rates are delivering a much-needed confidence boost to homeowners, many of whom have sat on the sidelines over the last two years. As market activity increases, expectations of lower borrowing costs are likely to continue bringing buyers and sellers together.”
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