Rising Borrowing Costs Leave More Properties Unsold
A growing number of homes across the UK are struggling to attract buyers, with elevated mortgage rates continuing to weigh on demand despite recent signs of improvement in lending conditions.
According to property portal Zoopla, around three in five homes listed for sale since January remain on the market. The combination of higher borrowing costs and ambitious asking prices in some areas has made it more difficult for sellers to secure offers.
The findings highlight the ongoing challenges facing the UK housing market as households continue to navigate cost-of-living pressures and uncertainty surrounding the wider economy.
Mortgage Rate Increases Hit Buyer Confidence
Zoopla reported that agreed property sales were 7% lower than a year earlier, although the picture varied significantly across different parts of the country.
The sharpest declines were recorded in Wales, where agreed sales fell by 12%, and the East Midlands, where they dropped by 11%.
First-time buyers have been particularly affected by higher mortgage costs. A rise in mortgage rates during April, triggered by financial market turbulence linked to the conflict involving Iran, increased monthly repayments for many borrowers.
At the peak of the rate surge, a typical mortgage cost an average of £125 more per month than in January. In London, first-time buyers faced even greater pressure, with average monthly costs increasing by £232.
Data from Moneyfacts shows that the average two-year fixed mortgage rate rose from 4.83% at the beginning of March to a peak of 5.90% on 12 April. Since then, competition among lenders has helped reduce the average rate to 5.54%.
First-Time Buyers Face the Greatest Challenges
The increase in borrowing costs contributed to a 15% decline in buyer demand compared with the same period last year, according to Zoopla’s assessment of the market up to the end of May.
However, the impact has not been uniform across the UK. In north-east England, for example, mortgage costs for first-time buyers increased by a comparatively modest £66 per month over the same period.
Richard Donnell, Executive Director at Zoopla, said local market conditions remain crucial when assessing property sales performance.
“The national picture can only tell you so much,” he said.
“For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting.”
Donnell also pointed to recent reductions in mortgage rates as an encouraging development for prospective buyers.
“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,” he said.
Flats Among the Hardest Properties to Sell
Recent figures from the Bank of England indicate that mortgage approvals for house purchases fell to their lowest level in two and a half years during May, reflecting the impact of rising rates and the withdrawal of some mortgage products from the market.
The slowdown among first-time buyers has had a noticeable effect on the types of properties remaining unsold.
Zoopla found that around two-thirds of one-bedroom and two-bedroom flats listed for sale this year had yet to find a buyer. By contrast, the pace of sales for two-bedroom and three-bedroom houses has remained relatively stable.
Regional Differences Continue to Shape the Market
The slowdown has been less pronounced in northern England and Scotland, where mortgage cost increases have generally been smaller and the supply of homes available for sale remains tighter.
Estate agents report that, across many parts of the country, the number of homes coming onto the market currently exceeds buyer demand across a range of price brackets.
Jeremy Leaf, an estate agent based in north London, said uncertainty surrounding global events and domestic political developments had made buyers more cautious.
“Sales are taking much longer and it is proving increasingly difficult to generate commitment,” he said.
“However, the overwhelming majority of sales which have been agreed are proceeding, although inevitably more slowly.”
Economic Uncertainty and Regulation Add Further Pressure
Industry experts say mortgage rates are only one factor influencing market activity.
Lucian Cook, Head of Residential Research at Savills, said broader economic concerns are also affecting household decisions.
“Firstly, you’ve got uncertainty about the outlook for the economy. Clearly, if people are concerned about their personal finances, then they’re less likely to move,” he told the BBC’s Today programme.
“We have also seen substantial regulatory reform in the private rented sector. That means some landlords have brought more stock to the market, that shifted the balance between demand and supply.
“And at the very top end of the market, we’ve got ongoing concerns around the tax environment and what may change there.”
Outlook for the UK Housing Market
While mortgage rates have eased from their April highs, affordability remains a major challenge for many prospective buyers, particularly those entering the market for the first time. With more properties available and sellers increasingly willing to negotiate, buyers may find improved opportunities in the months ahead. However, continued economic uncertainty and borrowing costs are likely to keep pressure on housing market activity across much of the UK.
Julian Barnes is an acclaimed British novelist, essayist, and short-story writer renowned for his elegant prose and intellectual depth. His work often explores themes of memory, history, love, and the complexities of human relationships. Widely regarded as one of the leading voices in contemporary British literature, Barnes has earned international recognition for his thoughtful and innovative storytelling.