House prices have fallen in 35 per cent of British postcodes over the past year, up from 12 per cent a year ago, according to Zoopla. The deterioration is heavily concentrated in London and the South East, where 85 per cent of homes are now in postcodes experiencing price declines. Three-quarters of postcodes in the East of England are also seeing falls, along with 42 per cent in the South West. However, the average losses remain modest, with London homes losing £5,400 on average. The biggest declines are in specific neighbourhoods: west central London has seen values fall 5.7 per cent, north-west London down 2.2 per cent, and coastal towns including Torquay, Bournemouth and Truro down between 1.7 and 2.2 per cent. By contrast, the North West and Scotland continue to see growth, with prices rising by more than 4 per cent in Liverpool, Carlisle and Kilmarnock postcode areas, and average prices in the North West £6,600 higher than a year ago.
Higher mortgage rates have fundamentally reshaped buyer behaviour. The mortgage required to purchase a home with a 20 per cent deposit is currently 64 per cent more expensive than five years ago, This is Money reported. Sales agreed in the past four weeks were 7 per cent lower than a year ago, while the number of homes for sale jumped 7 per cent, giving buyers significantly more negotiating power. Richard Donnell, executive director at Zoopla, said getting the price right from the start is now essential. 'Overpricing significantly reduces the chances of selling, so sellers should seek advice from local agents on buyer demand and the right asking price for their home,' he said. Despite the regional falls, the average house price across Britain remains slightly higher at £273,100, up 0.8 per cent year on year.
The Government's proposed Your First Home scheme, expected to receive more details in the Budget, could provide relief for first-time buyers. The scheme will allow new build purchases with just a 2.5 per cent deposit, with an equity loan covering up to 20 per cent of the property's value and offering interest-free periods initially. Zoopla estimates that around a third of new homes could qualify under appropriately set local price caps, potentially supporting up to 30,000 purchases annually, equivalent to one in ten first-time buyer purchases. Donnell said the scheme is positive for the new homes industry and, if designed well, could stimulate demand. However, he emphasised that 'the biggest boost the Budget could provide to the housing market would be to create the conditions for lower mortgage rates', noting that improvement would come once average mortgage rates, currently close to 6 per cent, fall below 5 per cent.