The main correction factors were high mortgage rates, geopolitical uncertainty and lower housing affordability. Tensions in the Middle East have increased inflation expectations, fueling forecasts for further key rate increases. On Friday, the average rate on a two-year fixed mortgage loan reached 5.6%, and on a five-year mortgage it reached 5.66%, while at the beginning of the year both were below 5%. The number of mortgage applications approved has dropped to its lowest level since the beginning of 2024.
Realtors note the "confrontation" between buyers and sellers. Sellers are in no hurry to significantly reduce prices, believing that they have already done so, while buyers prefer to wait. Deals are now more often concluded with realistic requests from sellers.
Regional dynamics remains multidirectional. Northern Ireland continues to lead in price growth (+6.9% to 231,245 pounds), followed by Scotland (+3.5%) and Wales (+0.6%). In England, there is a clear gap between north and south: the northeast and northwest showed an increase (2.7% and 2%, respectively), while the southeast recorded the largest decrease in the country - by 1.6% to 381 729 pounds, and in Greater London prices decreased by 1.5% to 534,177 pounds.
Analysts expect the market to remain sluggish in the coming months. "Sellers are not panicking or aggressively lowering prices, they are just biding their time. Buyers, meanwhile, are waiting for clarity on the trajectory of interest rate changes," commented Anthony Codling, analyst at RBC Capital Markets. Lloyds predicts that the current slowdown will have a limited impact on prices in the long term.
Source: The Guardian
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