Home buyer activity has begun to pick up again following a summer lull, despite higher mortgage rates continuing to squeeze affordability, new analysis shows.
The number of people searching for homes to buy increased by 7% in the four weeks to August 16, compared with last year, property portal Zoopla found.
The number of house hunters is higher across every region in the UK for the first time in a year – with the strongest levels of activity coming from the east and southeast of England, and Wales.
open image in galleryZoopla said the increase pointed to early signs of increased demand among potential buyers, but that it will take time for searches to translate to enquiries and sales.
It comes as sellers have been continuing to list homes for sale on the platform, with the overall stock of properties up 5% on last year.
However, the number of homes being newly listed for sale remains lower than last year, the analysis found.
Mortgage rates jumped higher earlier this year amid the conflict in the Middle East, which impacted financial markets in the UK.
They have been edging lower since the spring, but many buyers continue to see higher rates than they did at the start of the year, leading some to put activity on hold.
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Zoopla said average five-year fixed mortgage rates have risen from below 4% in January to around 4.8% – leading to reduced affordability for home buyers.
This means that buyers would need to borrow less on a home or add more to their deposit on a purchase if they wanted to keep monthly repayments unchanged.
Meanwhile, house prices across the UK grew by 0.9% in July, compared with the same month last year, to an average of £272,800, according to Zoopla’s house price index.
open image in galleryThis is a slower rate than the 1.3% year-on-year increase recorded in June.
Richard Donnell, executive director at Zoopla, said: “Many buyers have taken a ‘wait and see’ approach over the summer months in response to higher borrowing costs and political uncertainty.
“The low point for activity was mid-July around the time of the World Cup final.
“Since then we have seen a steady increase in the number of people searching for a home, assessing their options ahead of the post-holiday rebound in sales market activity.
“This is a nationwide trend and the first time searches for homes are up across Britain this year.
“Average mortgage rates have stabilised but remain closer to 5% than 4%, meaning affordability remains an important factor for many home buyers choosing their next home.”