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UK house prices rise as agreed sales jump

house prices The red brick Victorian row houses of Muswell Hill with panoramic views across to the skyscrapers and financial district of the city of London.
House prices were up 1.9% in a year, according to the Zoopla house price index for May. Photo: Getty (coldsnowstorm via Getty Images)

House prices are up 1.9% in a year as property sales have reached their highest point this year, with sellers cutting asking prices by just over 5%.

Despite weaker demand than a year ago, sales agreed in May have reached their highest point this year and are up 11% on the five-year average according to Zoopla’s latest House Price Index.

The figures show that 18% of homes currently listed for sale on Zoopla have had the asking price cut by more than 5%, down from 28% in February.

Demand and sales agreed are running above the five-year average in Scotland, the North East and London, which have been the best-performing regions over the last four weeks.

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In contrast, demand for housing in regions in southern England is lagging behind as these regions posted above-average house price growth in recent years, ahead of earnings. This has added to affordability challenges and the impact of higher mortgage rates.

Annual house price growth has slowed in key cities including Oxford (+0.1%), Cambridge (+0.3%), Reading (0.8%) and Brighton (+0.8%).

Read more: UK house prices jump to record high of £373,000 in May

House prices were up 1.9% in a year, according to the Zoopla house price index for May. In London, they were down 0.2% in a year.

Overall prices have fallen 1.3% in the last six months, but falls have slowed, and Zoopla expects them to remain static though the rest of 2023.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Zoopla’s sunny optimism about property has dimmed slightly, as the risk of rising rates casts a shadow over the market.

“It highlights there are still plenty of positives — including higher sales, and fewer price reductions. However, to an enormous extent, the future of the market lies in the Bank of England’s hands."

Zoopla also said that landlords selling homes make up 11% of properties for sale, as higher mortgages and rising costs make renting less attractive.

Read more: Era of 'massive rises' of house prices is over, expert says

Richard Donnell, executive director at Zoopla, said: “Falling mortgage rates in recent months together with the strength of the labour market has brought more buyers and sellers into the market. There are still fewer buyers in the market than a year ago, but sales are still being agreed with more homes to choose from.

“Sellers shouldn’t get carried away by more positive data on the housing market and need to price their homes realistically if they are serious about moving home in 2023. Home buyers remain price sensitive with one eye firmly on the outlook for the economy, the cost of living and the trajectory of mortgage rates which appear likely to edge higher in the coming weeks.”

Watch: How much money do I need to buy a house?

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