Two weeks later - Zoopla warns demand and sales have ...

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14 October 2022

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By Marc Shoffman

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Two weeks later - Zoopla warns demand and sales have dropped since mini-Budget

Buyer demand has dropped by a fifth in the fortnight since the mini-Budget while supply has increased from worried homeowners, Zoopla claims.

Analysis of activity on the portal for the two weeks from Chancellor Kwasi Kwarteng’s fiscal announcement on 23 September to 9 October, suggests the subsequent push to 6% mortgage rates has panicked some in the market.

Demand levels dropped 21% over the past two weeks, falling by as much as 24% in the South East and 28% in the West Midlands, Zoopla said.

The number of sales agreed fell by 15% in the past week after an increase in new sales in the first week after mini budget as buyers rush to agree sales and use cheap finance, the portal warned.

There has been a surge in new supply of homes for sale jumping 20% in the week after the mini-Budget, which Zoopla attributed to “owners with cheap mortgages looking to try and sell their homes.”

Asking price reductions have also spiked higher as agents adjust pricing for vendors.

Zoopla said 4% of homes have had asking prices reduced by more than 5%, more than £18,500 on average, in the past two weeks.

The level of price reductions remains below 2018 levels as the full price impact of weaker demand will take time to feed through, the portal said.

Zoopla is now predicting there will be a “hiatus of new buyers” over the fourth quarter as those without cheap finance step back from the market.

The portal suggests those with cheap loans arranged before rates moved higher will remain in the market but uncertainty over the outlook for prices will be a concern and some sellers may need to accept less to achieve a sale increasing the risk of fall throughs.

It estimates the pipeline of sales is currently 293,000, adding: “The impact of weaker demand and fewer sales will take time to feed through into pricing - the full impact may not become apparent until the first quarter of 2023 as the fourth quarter is a quieter period of new business and the market typically slows quickly from mid-November.”

Richard Donnell, executive director at Zoopla, added: “Uncertainty amongst home buyers has dented housing market activity.

“After an initial scramble from those with cheap loans to agree sales, the last week has seen buyer interest drop by a fifth.

“The final few weeks of the year will be about closing out existing deals with agents, mortgage brokers, buyers and sellers facing increased down-valuations and general concerns about prices falling in 2023. Those with cheaper mortgages will continue to seek out homes to buy providing some support to market activity.

“While we have seen a lot of focus on mortgage rates, it is important to note that a quarter of buyers don't use any mortgage and many more have small sized loans so the higher cost of borrowing will mainly hit those seeking larger sized loans.

“We have seen a spike in asking prices being cut but at levels that remain below what we saw in 2018. The impact of weaker demand on pricing will take time to feed through and won't become clear until the new year as many would-be sellers, especially those without cheap finance, will step back from the market and review what the outlook is like as we enter 2023.”

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- James Wyatt
- 14 October 2022 07:48 AM
All Zoopla can waffle about is a UK position it is a load of clap trap. The position in Cardiff is different Edinburgh to Newcastle to my area in Virginia Water. Am I worried - slightly. Am I terrified. No. Business has ups and downs. If you haven’t got yourself ready for this moment - you’ll be bust soon.

- Ed Mackenzie Smith
- 14 October 2022 08:44 AM
Thanks for the update Zoopla.

- Algarve Investor
- 14 October 2022 12:03 PM
If the rumours are to be believed, the Mini-Budget could be getting the axe anytime soon - along with the Chancellor!