Is the property market still stabilising?

Buyers and sellers are back doing business but the outlook for the housing market still hangs in the balance, according to property portal Zoopla.

The company’s house price index looks at the latest housing trends in May 2023 and highlights why recent inflation figures might put a brake on market activity.

It suggests UK house prices have fallen 1.3 per cent in the last six months but the rate of decrease has now slowed and more homeowners are putting their house up for sale as confidence improves.

It also suggests that lower mortgage rates in the first half of 2023 have supported an increase in housing market activity.

According to the report, however, mortgage regulations have limited the impact of higher mortgage rates on house prices so far – and the increased likelihood of further interest rate rises (meaning higher mortgage rates) is likely to weaken demand and market activity in the second half of the year.

Despite the increase in house sales in May, Zoopla found that sellers are still having to retain “realistic” asking prices in order to attract interest from potential buyers, who are closely following economic developments.

Close to a fifth (18 per cent of homes currently listed for sale on Zoopla have had their asking price cut by more than five per cent down from 28 per cent in February.

Richard Donnell, the executive director of research at Zoopla, says: “Sellers shouldn’t get carried away by more positive data on the housing market and need to price their homes realistically if they are serious about moving home in 2023.

“Homebuyers remain price sensitive with one eye firmly on the outlook for the economy, the cost of living and the trajectory of mortgage rates, which appear likely to edge higher in the coming weeks.”