The number of house purchases in Britain for the current year is projected by property website Zoopla to decline by 21%, reaching its lowest point since 2012. This drop is attributed to the impact of increasing borrowing costs, Zoopla forecast on Wednesday (30).
Zoopla forecast there would be 1.0 million residential housing sales this year, down from 1.26 million last year and a 14-year high of 1.48 million in 2021 when ultra-low interest rates and pandemic tax incentives boosted demand.
“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,” Zoopla’s executive director, Richard Donnell, said.
Zoopla forecast that house purchases funded by mortgages would drop 28% this year, while cash buyers would fall just 1% and account for more than a third of sales.
The most recent official data showed that there were 22% fewer house purchases in the three months to the end of June than a year earlier.
Average house prices in May were down 2% from their peak last September, but were still more than 20% higher than before the start of the Covid-19 pandemic, when cheap finance and demand for more spacious homes drove a surge in prices in many Western countries.
Since December 2021, the BoE has raised interest rates 14 times to 5.25% – their highest since 2008 – from 0.1% in a bid to tackle rampant inflation, and markets expect two further rate rises to 5.75% this year.
The BoE is due to release July mortgage lending data at 0830 GMT.
Zoopla provides property valuations and also advertises more than 1 million properties for sale or to rent.