The number of house sales with a mortgage is expected to plunge by nearly a third as interest rates continue to soar
The number of home sales taking place across the UK this year is on track to be around a fifth lower than in 2022, according to a property website.
Cash sales where buyers are not relying on a mortgage are expected to hold up relatively well, edging down by 1% compared with 2022. Existing homeowners using a mortgage typically account for a third of annual sales. This group may be more likely to wait until the outlook for mortgage rates improves, Zoopla suggested.
The Bank of England has been raising interest rates to quell stubbornly high inflation. Zoopla said that if mortgage rates were to fall below 5%, this would improve affordability and stimulate more home moves. The UK house price-to-earnings ratio will be in line with the 20-year average at the end of 2023 at a multiple of 6.3 times, Zoopla predicted. In London, the average house price-to-earnings ratio is set to move into single digits for the first time in 11 years, the website expects, to an estimated 9.6, down from 10.7 in 2022.
“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. “Our buy-to-let investors have fallen slightly due to the mortgage rates and the criteria involved, although our rental stock remains in high demand.”
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