House prices growth slowed in May, to levels not seen since December 2019 according to the latest Zoopla data.

This slowdown comes after two years of unprecedented growth in property prices. Much of this growth has been driven by a ‘race for space’ post pandemic, and attractive short-term stamp duty reductions.

But Zoopla points out that despite this lower rate of growth it is still a sellers’ market, with overall demand for housing across the UK significantly higher than the five-year average. 

In total Zoopla figures show that annual property prices were up 8.4%, compared to 9.2% growth in April. On a quarterly basis prices are up by just 1.4%, the slowest growth since March 2021. 

Wales has continues to see the biggest annual house price growth, with prices up by 11.4% in May. At the oppose end of the scale was London, where property prices increased by just 3.9% in May. 

However Zoopla points out that this equates to approximately the same monetary increase in house prices, with average values in Wales are up by £32,000 over the last 24 months taking prices to an average of £192,500. 

This contrasts to £30,000 in London over the same period, with average house prices of £516,100.

Of the UK’s largest cities, Nottingham has the highest price growth at 10.4%, followed by Bournemouth at 10.2%. Nottingham has been among the top performers in terms of price growth for the last year, with the relative affordability in the city increasing its appeal, while the rise in prices in Bournemouth reflects the ongoing appetite for coastal living Zoopla said.

When it comes to selling property, the market in the South West remains the most buoyant, with the average property taking 19 days between listing and offer accepted.  Bristol, South Gloucestershire, Plymouth, Swindon and  Exeter the fast moving markets due to more stock and choice in these areas.

London continues to lag behind and remains the UK’s slowest moving market, with the time taken to sell a property currently at 35 days, compared to 22 days nationally.  However this is still above the five-year average of 50 days. 

While buyer demand remains higher than the five-year average, Zoopla says it continues to decline week on week.

This Zoopla research also looks at the changes to mortgage pricing. It found buyers are facing average rates of 3.37% for a five-year fixed-rate home loan, compared to 2.64% in December — increasing the annual cost of a loan by more than £870. These figures are based on £250,000 loan with a 25% deposit.

Zoopla says that if five-year mortgage rates rise by another basis point, this would mean average rates of 4.62%  – a level not seen since April 2010. This would push the cost of mortgage repayments up by £2,500 compared to December 2021.

Zoopla says it doesn’t anticipate house price falls in 2023, or any increase in forced sellers. But it says it expects buyers to become more price sensitive leading to fewer sales and lower price growth.

This, it says, is due to the number of homeowners on fixed-rate mortgages, which protects them against interest rate rises in the short to medium-term, the stress tests carried out on those loans, and the healthy employment market.

It says that although house prices may not be growing as fast as they were, the rate of annual house price growth is steady, with house prices are expected to ease back in the coming months to 3% by year end.

Zoopla head of research Gráinne Gilmore says:  “Buyer demand is still strong in the housing market, but signals are emerging that the impetus may be easing, so those who want to make a move should investigate their options sooner rather than later. In addition, mortgage rates are likely to continue to climb, so locking into a rate shortly could save hundreds over the longer-term.

“There are many factors supporting the price growth seen since the start of the pandemic, not least the continued imbalance between demand and supply, but the increasing cost of living, increasing mortgage rates for buyers  and cloudier economic outlook will act as a brake on house price growth through the rest of the year.”