House price growth to slow by end of year

HOUSE price growth will slump to 5pc by the end of this year before the real impact of the cost of living crisis hits the housing market in early 2023, new research shows.

The pace of annual house price in June was 8.3pc, a drop from the 9.6pc high recorded in March, according to property website Zoopla. The slowdown came as rising mortgage rates and inflation hit the market.

Richard Donnell, of Zoopla, forecast that the rate of growth would fall to 5pc by the end of 2022.

“Buyer interest is expected to slow over the coming months as people tighten their belts and spend with more caution, which will see price growth weaken further,” he said.

Mr Donnell said sellers should be “realistic” when pricing their homes to sell as rising mortgage rates take their toll on the market at the end of this year and the start of 2023. Buyer demand, which Zoopla measures as a combina- tion of searches and inquiries, was weakest in the markets that have been experiencing some of the highest price rises, such as Wales and the South West.

In the four weeks to July 17, buyer demand in Shrewsbury was down by 16pc compared to the five-year average.

Eastern central London and southwest London recorded respective drops of 12pc and 5pc. In Truro, Chester and Torquay, the falls were 3pc, 2pc and 1pc.

In London, a lack of affordability is also depressing demand. The capital was the most unaffordable market in the country, with house prices at 11.6 times earnings. It recorded the slowest rate of house price growth, at 4pc.

But in areas in the North and Midlands demand is booming, up 98pc in Bradford and 91pc in Wolverhampton.

Zoopla upgraded its sales forecasts as the shift to home working continues to push people to move. It now expects 1.3m transactions across 2022, 100,000 more than it had forecast in January.