Buyers return after a summer on the sidelines
Buyers return after a summer on the sidelines with searches up 7% – but buyers need an extra £18,200 to keep mortgage payments flat
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Clear signs the autumn bounce is starting – the number of people searching for homes to buy up is 7% YoY – it is a national rebound with more people searching in every region for the first time in a year – since August 2025
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The rebound in activity is despite would-be home buyers being hit by higher mortgage rates with buying power down by 9% when compared to January
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The average home buyer using a mortgage needs £18,200 more for deposits to counter higher rates since January, reaching £35,500 in London.
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More buyers have been sitting on the sidelines over the summer with sales down 6% YoY, but the gap to last year is starting to close as activity starts to increase
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Sellers keep listing homes for sale – there are 5% more homes on the market than this time last year, providing plenty of choice for buyers
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House price growth has cooled further to +0.9% YoY in July, compared to +1.3% in June
Home buyers have been returning to the housing market in growing numbers over the last 4 weeks following a slowdown in activity over the summer according to Zoopla’s latest House Price Index. This is despite a 9% reduction in what households can borrow compared to the start of the year.
Mortgage rates peaked at close to 5% in April and this has led to more home buyers waiting on the sidelines over the summer months. Sales agreed are still down by 6% versus last year but the gap to last year is starting to close. Buyers can’t wait on the sidelines indefinitely and stability in mortgage rates means people are starting to search for homes again (+7% YoY).
Figure 1 – Year-on-year change in demand, buyer enquiries and sales agreed
Buying power 9% lower since January as higher mortgage rates impact activity
Average five-year fixed mortgage rates have risen from below 4% in January to around 4.8% today. For a buyer who could previously afford a £200,000 mortgage while keeping their monthly repayment unchanged, that rate rise means they can now only borrow around £182,000 for the same monthly payment – a 9% reduction in how much they can borrow (or ‘buying power’).
In the face of reduced buying power, home buyers can choose to: wait for rates to move lower, look to buy cheaper homes, accept paying more on their mortgage repayments or put down a larger deposit to reduce the impact. There is no evidence of buyers scaling back on requirements and many have decided to wait over the summer with fewer sales agreed compared to last year.
The average home buyer would need to add an additional £18,200 to their deposit on a home purchase to keep the monthly mortgage repayments unchanged compared to the start of the year. This varies between regions, reflecting the variation in house prices – buyers in London would need to add almost double the national average to their deposit (£35,500) while lower house prices mean those in the North East would only need an additional £10,200.
The impact of higher mortgage rates on buying power is greater on first time buyers who often take longer mortgage terms and larger loans compared to existing homeowners.
Figure 2 – Extra equity required to offset the impact of higher mortgage rates by region
Buyers returning to market despite decrease in power
Despite reduced buying power, mortgage rates have stabilised and there has been a clear and sustained increase in the number of people searching for homes on Zoopla which is up 7% YoY – the highest increase since mortgage rates jumped in the Spring.
Importantly, searching for homes is higher across every region and country for the first time in a year (since August 2025). The pick up in searching activity is strongest in the South East (+8.9%) and East of England (+8.5%), while the North West (+0.7%) has seen the lowest increase.
An increase in searches shows prospective home buyers starting their home buying journey and assessing the choice of homes and how pricing has changed over the summer. Late August and early September tend to see an increase in asking price reductions as sellers adjust pricing to attract buyers over the autumn.
Figure 3 – The number of people searching for homes is up across all areas
The increase in property searches is an early sign that buyers are considering their options. This activity will take time to feed into more buyer enquiries, and sales agreed in the coming weeks although it’s clear that the gap to last year in sales and buyer demand is starting to close.
Buyers have plenty of homes to choose from. The number of homes being newly listed for sale is close to last year and shows that serious sellers are starting to return to the market, many of whom are also buyers. In terms of the overall stock of homes for sale this is 5% higher than a year ago – this extra choice will ensure house price inflation remains held in check as buyers can make competitive offers.
House price growth remains subdued
House price growth has stepped lower and, now sits at +0.9% YoY to July – down from 1.3% last month – as fewer sales and affordability pressures limit price growth
Prices are flat to falling across most Southern regions in England, where declines range from -0.3% in the South East to -1% in London, where buyers are most exposed to higher borrowing costs. On the other hand, prices continue to rise across most of the North and Midlands (1.7% in Yorkshire – 3.1% in the North West, while Northern Ireland (+5.4%) sees the highest year-on-year increase.
Figure 4: Annual house price inflation per region – July 25 and 26 comparison
Table 1: Average house prices and annual change per area
|
Country/region |
Current average price |
Average annual price change – July 2026 |
Average annual price change – July 2025 |
|
East Midlands |
£234,000 |
+0.8% |
+1.7% |
|
East of England |
£337,600 |
-0.1% |
+1.3% |
|
London |
£525,400 |
-1.0% |
+0.7% |
|
North East |
£151,800 |
+2.5% |
+2.9% |
|
North West |
£210,100 |
+3.1% |
+3.2% |
|
Northern Ireland |
£199,500 |
+5.4% |
+7.6% |
|
Scotland |
£176,400 |
+2.8% |
+3.0% |
|
South East |
£383,600 |
-0.30% |
+0.7% |
|
South West |
£310,500 |
-0.40% |
+0.7% |
|
Wales |
£212,900 |
+2.1% |
+2.4% |
|
West Midlands |
£238,700 |
+1.5% |
+2.1% |
|
Yorkshire and the Humber |
£196,100 |
+1.7% |
+2.3% |
|
UK |
£272,800 |
+0.9% |
+1.8% |
Richard Donnell, Executive Director at Zoopla, says, “Many buyers have taken a ‘wait and see’ approach over the summer months in response to higher borrowing costs and political uncertainty. The low point for activity was mid July around the time of the World Cup final. Since then we have seen a steady increase in the number of people searching for a home, assessing their options ahead of the post holiday rebound in sales market activity. This is a nationwide trend and the first time searches for homes are up across Britain this year.
Average mortgage rates have stabilised but remain closer to 5% than 4% meaning affordability remains an important factor for many home buyers choosing their next home. Buyers have plenty of choice this autumn and will be able to make competitive bids for homes. Motivated sellers need to price carefully to attract interest and bids and seek the advice of local agents for the likely levels of demand and interest in their home as market conditions vary widely across the country.”
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