UK house price growth will slow to 3% by the end of the year as buyer demand slows down, Zoopla predicted in its house price index.
Annual growth has remained at 8.4% in the year to May 2022, while prices only rose by 0.1% on a monthly basis, the lowest growth rate in two and a half years.
In Zoopla’s commentary the company said: “We do expect the rate of price growth to ease – on a monthly basis price growth has already moderated.
“A continuation of this trend, with some monthly declines, will mean annual price growth will reach +3% by year end.”
It added: “The level of buyer demand in the market, while still high compared to the five-year average, is beginning to recede to more normal levels.
“As the pressure on supply from buyer demand starts to ease, it will put a brake on the intense upwards pressure on pricing.
“Another signal from the market is coming from the speed at which home sales are proceeding. The average time to sell (listing to sale agreed) is rising – up to 22 days in May from 20 days in March.”
Nottingham and Bournemouth lead the way
Nottingham has highest price growth at +10.4% followed by Bournemouth at +10.2% – at a time when both locations’ football teams gained promotion to the Premier League.
London’s annual growth rate sits at 3.9%, while Edinburgh growth stands at 4.3%.
Home sales are fastest in the South West (19 days) and slowest in London (35 days), demonstrating where there’s more demand.
Prepare for lower growth
Kevin Webb, managing director at Legal & General Surveying Services, said: “As many predicted, the record spike in house price growth we saw in the UK during the pandemic has plateaued.
“Yes, the average UK property price has mostly remained the same since last month’s update, but as inflation spirals and the rising cost of living continues to pinch, the market should prepare itself for lower rates of price growth in the coming months.
“However, while the declining demand for properties might alarm sellers, aspiring homeowners may take advantage of the situation to secure their dream property. Indeed, mortgage rates are set to make some considerable gains week on week.”