Resilience of housing market tested says Zoopla

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Resilience of housing market tested says Zoopla

The resilience of the housing market and homebuyers is set to be tested as mortgage rates increase over 5% says Zoopla in its latest House Price Index.

The longer rates stay over 5%, and closer to 6%, the increased hit to buying power will result in lower prices and sales volumes. However, the transition to higher borrowing costs will take time to feed through and there is a large equity buffer to absorb house price falls making the risk of negative equity much smaller than in previous downturns says Zoopla. The hit to buying power from borrowing costs rising from 2% to 4% has slowed the rate of price growth rather than driving sizeable year-on-year price falls. Lower sales volumes have also masked the impact to some degree. Buyers can offset reduced buying power by either injecting more equity into purchases or taking longer mortgage terms.

The number of homes for sale is back to pre-pandemic levels. Further expansion in homes for sale, either voluntarily, or partially forced through changing circumstances would boost supply. This would increase choice and create further room for negotiation on price.

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