Expert Insights – Navigating the Summer Slowdown

Richard Donnell, Executive Director of Research at Zoopla, emphasises that the UK housing market is currently undergoing an adjustment phase in response to increased borrowing costs. This is manifesting as a typical summer slowdown in market activity.

However, Donnell highlights the significance of the timing of the first base rate cut, which is anticipated to bolster market sentiment and reinvigorate sales activity. This suggests that while a usual seasonal dip is expected, there is potential for a resurgence in market momentum once borrowing costs ease.


Election Impact and Market Trends

The recent call for a UK general election has introduced a layer of uncertainty into the housing market, with buyers and sellers at earlier stages of the process showing a tendency to postpone decisions until after the election. This hesitancy has contributed to a slight month-on-month decline in sales agreed across all regions, particularly in the North East and West Midlands.

Despite these fluctuations, the market has demonstrated notable resilience in the face of rising mortgage rates, which have climbed from below 2% in late 2021 to the current rate of 4.7%. While higher borrowing costs have impacted affordability and decreased sales volume, house prices have remained relatively stable due to the low number of forced sellers and historically low unemployment rates.

Looking ahead, Zoopla predicts muted house price inflation in the short term. Prices are expected to rise at a slower pace than household incomes over the next one to two years.

Overvaluation Trend Reverses

Zoopla’s latest market analysis reveals a significant shift in the UK housing landscape, with affordability becoming an increasingly prominent factor. While the latter part of 2023 saw a notable overvaluation of house prices, reaching 13% due to soaring mortgage rates, the tide has been turning.

Several factors have contributed to this positive trend. Robust wage growth over the past three years has bolstered household disposable incomes, partially offsetting the impact of higher borrowing costs. Additionally, buyers have increasingly turned to longer-term mortgages to enhance their purchasing power, further contributing to market stability.

Based on these trends and assuming a moderate 1.5% rise in house prices alongside stable mortgage rates at 4.5%, Zoopla projects that the current 8% overvaluation will be entirely eradicated by the close of 2024. This anticipated rebalancing of the market not only signifies a return to ‘fair value’ but also a brighter outlook for aspiring homeowners and those seeking to move up the property ladder.

The Impact of Interest Rates

The trajectory of the UK housing market is inextricably linked to the ebb and flow of interest rates. While current projections point towards a stable 4-4.5% range for mortgage rates into 2025, the potential for base rate cuts in the coming months could significantly alter this landscape. Such reductions could inject renewed confidence into the market, stimulating buyer activity and accelerating price growth. However, the extent to which fixed-rate mortgages will be affected remains to be seen.

Beyond the immediate impact on affordability and sales volumes, interest rates play a pivotal role in shaping the broader narrative of the UK housing market. Regional disparities are becoming increasingly apparent, with South England expected to experience a slower pace of price growth than the national average. This divergence reflects the ongoing recalibration of house prices in relation to local income levels, underscoring the importance of regional economic factors in determining market outcomes.

Looking ahead, the interplay between interest rates, wage growth, and inflation will be crucial in shaping the market’s trajectory. While a period of relative stability is anticipated in the near term, the potential for external shocks and policy changes could introduce unforeseen volatility. As such, stakeholders across the housing ecosystem – from buyers and sellers to investors and policymakers – must remain vigilant and adaptable in navigating the evolving landscape of the UK property market.

The market’s future hinges on a delicate balance between affordability, demand, and economic stability. By closely monitoring interest rate fluctuations and their cascading effects on various market segments, stakeholders can make informed decisions and position themselves for success in an ever-changing environment.



Despite the inherent uncertainties in the economic and political landscape, the UK housing market has consistently demonstrated adaptability and resilience. The current data presented by Zoopla suggests a gradual shift towards a more balanced market, with overvaluation decreasing and prices aligning with incomes. The anticipated base rate cuts and continued wage growth offer further optimism for both buyers and sellers.

While regional disparities and the influence of interest rates warrant close attention, the overall outlook for the UK housing market remains buoyant. With continued adaptability and resilience, the market is well-positioned for sustained growth and stability in the years to come.


A Note on Zoopla’s House Price Index:

The data presented in this post is derived from Zoopla’s comprehensive House Price Index. This index employs a repeat sales methodology, utilising a vast dataset of sold prices, mortgage valuations, and agreed sales data.

This robust approach allows for an accurate and granular tracking of price changes across the UK housing market, providing valuable insights into regional trends and overall market dynamics.