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Zoopla: 'Forced sales unlikely but price growth will slow'

The property market is unlikely to see forced sales but buyers are becoming more price sensitive, Zoopla warns.

The property portal’s latest data shows average property values grew by the lowest monthly rate since December 2019 during May.

Its house price index, which looks at sold prices, demand, supply and mortgage approvals, found average values rose by just 0.1% on a monthly basis and annual growth slowed from 9.2% to 8.4% to £251,550.

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The data showed that buyer demand remains 40% above the five-year average and new supply is just 4% higher.

But the level of demand is starting to recede, Zoopla warns, and properties are staying on the market for longer.

The average time from listing to sale agreed has increased from 20 days in March to 22 in May.

The fastest-moving market is in the south west of England, with the average length of time taken between listing and agreeing a sale less than three weeks at 19 days.

However, buyer demand for houses in the south west has also seen the sharpest decline, down 14% in May, even as it remains 37% above the five-year average. 

Homes in London are staying on the market longest, with 35 days between listing and sale agreed – although this is still a large reduction on the five-year average of 50 days to agree a sale. 

Zoopla said buyers were now facing higher mortgage costs as a result of Bank of England interest rate rises so predicted they would become more price sensitive which could see annual price growth slow to 3% this year.

But the portal suggested there would be few forced sales despite the economic climate due to tougher mortgage stress tests in recent years.

Gráinne Gilmore, head of research at Zoopla, said: “With this in mind, owners considering whether now is the right time to put their house on the market are urged to act now.

“Buyer demand is still strong in the housing market, but signals are emerging that the impetus may be easing, so those who want to make a move should investigate their options sooner rather than later. In addition, mortgage rates are likely to continue to climb, so locking into a rate shortly could save hundreds over the longer-term.

“There are many factors supporting the price growth seen since the start of the pandemic, not least the continued imbalance between demand and supply, but the increasing cost of living, increasing mortgage rates for buyers and cloudier economic outlook will act as a brake on house price growth through the rest of the year.”

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