Zoopla HPI: Housing market "hits the pause button" with first annual drop in new sales in two years as buyers hold back

THE housing market has “hit the pause button” in its first annual drop in new sales in two years as buyers hold back ahead of the Budget next month.

Buyer demand is down 8% compared with last year, while sales agreed have fallen by 3%, with the slowdown most noticeable in higher-value areas, Zoopla's latest House Price Index found.

House price inflation is steady at 1.3%, with prices flat in southern England but rising by more than 2% elsewhere.

More homes are for sale, a rise of 7%, with serious buyers now having more choice than they have seen in recent years.

The average time it takes to sell a home has increased to 37 days, around 10% longer than this time last year.

A total of 350,000 homes worth £100bn are progressing through the sales pipeline – the largest in four years.

Dariusz Karpowicz, Director at Doncaster-based Albion Financial Advice, said the market is on pause.

He added: "Buyers are treating property viewings like they're waiting for the January sales, except nobody knows if prices will actually drop. The Budget has turned house hunting into a spectator sport. 

"You've got buyers clutching their deposits, watching from the sidelines whilst sellers polish their For Sale signs for the tenth week running. With sales down 3% year on year and homes taking 37 days to shift, pricing your property like it's still 2021 won't work. Southern England's prices have gone completely flat, whilst everywhere else manages a modest 2% rise. 

“The good news? If you're buying, you've got 7% more choice than last year. If you're selling, price it right or prepare for a long winter of viewings. Budget uncertainty has made prudence the new normal; buyers haven't disappeared, they're just waiting to see which way the wind blows.”

Ranald Mitchell, Director at Charwin Mortgages, agreed, adding: "The housing market has hit the pause button as buyers hold their breath ahead of the Budget. After months of steady recovery, people want to know what the Chancellor has in store before making big financial decisions. 

“Demand hasn’t disappeared, it’s just sitting on the sidelines. With more homes for sale and pricing now critical, those who stay realistic will still get moving. It’s less a sign of weakness, more the calm before the fiscal storm.”

Michelle Lawson, Director at Fareham-based Lawson Financial, said many are waiting until after the Budget to make decisions.

She continued: "The market is definitely slowing down as the Halloween Government have managed to put the frighteners on people with their hesitancy and insistence of tax-grabbing which affects confidence to proceed. 

“Many people are wanting to see what the landscape looks like post-Budget but this does make for grim reading. Chains coming together are taking longer before the legal process can start and it is all quite painful.”

Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, agreed, adding: "There is a real lack of confidence at the moment from buyers, with everyone holding their breath awaiting to see the full impact of the forthcoming Budget.

"Everyone knows it will not be a positive Budget, but the question is how bad."

Patricia McGirr, Founder at Burnley-based Repossession Rescue Network, said the housing market is suffering.

She continued: "The housing market isn’t broken, it’s behaving exactly as you’d expect when confidence goes missing. Buyers haven’t vanished but they are cautious. With the Budget on the horizon and mortgage costs still biting, most are waiting to see whether to stretch or stand still. 

"This isn’t panic, it’s prudence. For sellers, realism is the new currency. Price with your head, not your heart, and you’ll still find a buyer. Those clinging to yesterday’s valuations will be left polishing For Sale signs well into winter. Confidence moves markets, not policy statements, and right now we’re short on both conviction and clarity."