The mood in Britain's property market is turning gloomy. The latest figures from property portal Zoopla show that three out of every five homes listed in January are still waiting for a buyer. Sky-high mortgage rates have left house hunters frustrated, putting a purchase out of reach for many. With demand drying up, a string of expensive properties remain unsold, including homes in otherwise sought-after neighbourhoods. The strain is plain to see across the sector, as wages simply are not keeping pace with rising prices.
The data shows agreed sales have slipped 7% below last year's deals. Every region of the country is wrestling with weak demand. Sales have dropped 12% in Wales and 11% in the East Midlands. First-time buyers are bearing the brunt, since high mortgage rates make them hesitant to commit to a deal. A larger slice of their monthly income would go straight into EMIs, leaving them with barely anything to save.
It Isn't Just the Mortgage, Overpriced Homes Are Stuck Too
Interestingly, mortgage rates are not the only culprit. Homes priced in line with the market have generally sold. The problem lies with properties priced above the going rate, most of which are sitting idle while owners struggle to close a deal. "The national picture can only tell you so much," said Richard Donnell, executive director at Zoopla. "For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting."
"Sales are taking much longer, and it is proving increasingly difficult to generate commitment," said Jeremy Leaf, an estate agent in north London. "However, the overwhelming majority of sales which have been agreed are proceeding, although inevitably more slowly," he added. If conditions drag on, a housing market correction could be on the cards. Costly mortgages and pricey properties will keep first-time buyers largely out of the market, while sellers will find closing a sale both difficult and slow.
