LONDON — The number of houses sold in the U.K. this year is set to reach the lowest annual figure since 2012, real estate company Zoopla found in its latest house price index released on Wednesday.
The report shows an estimated 21% decline in sales to be completed in 2023 compared to last year, with one million transactions expected to finalise this year. That’s the equivalent of each household moving once every 23 years, an increase of six years from 2021, the monthly report found.
Demand for homes in the last four weeks is down 34% compared to the average of the last five years, as higher mortgage rates and cost-of-living pressures weigh on the market, Zoopla said.
The decline in sales comes as house price growth stutters, with a small increase of 1.7% in the 12 months to June, according to data from the Office for National Statistics. The average U.K. house cost £288,000 ($364,000) in June, which is £5,000 more than the same period in the previous year, but £5,000 below the latest peak in November 2022.
While house prices have seen a small uptick, sales numbers have been hit hardest by higher borrowing costs, Richard Donnell, executive director at Zoopla said in a press release.
“Cash buyers are more immune and on track to account for more than one in three sales in 2023,” Donnell said.
“Mortgage rates have started to fall slowly but rates need to fall below 5% before we see an increased appetite to move home in the second half of 2023,” he added
The number of cash sales is estimated to fall around 1% compared to last year, Zoopla estimates, while the number of mortgaged sales could drop by 28% as homebuyers face higher mortgage rates.
The Bank of England hiked interest rates for a 14th consecutive time on Aug. 3, bringing the figure that underpins most mortgage lending rates to a 15-year high of 5.25%.
Mortgage rates have started to come down but remain high, with the average rate for a 2-year fixed mortgage for a 95% loan at 6.7% for the week of Aug. 21, online real estate company Rightmove said last week. That’s a drop of 0.2% compared to the previous week.