Half of homes in Great Britain are taking longer to sell than they did a year ago, as volatility in the mortgage market linked to the ongoing conflict in Iran prompts buyers to adopt a more cautious "wait and see" approach, according to a new report.
The property platform Zoopla found that homes in 180 out of 363 local authorities across England, Scotland and Wales were taking longer to sell compared with the same period last year. The findings point to a widening regional divide in the housing market, even as the national average time to sell has remained stable at 42 days.
Zoopla said buyers in property hotspots were racing to complete purchases, while uncertainty over the future cost of mortgages was encouraging a more hesitant approach in other areas.
According to the report, the UK's ten fastest-selling markets were all located in Scotland. Falkirk recorded the shortest average time to sell, at just 11 days. Elsewhere, Carlisle and Barnsley in England were the quickest-selling markets outside Scotland, each with an average of 23 days.
At the other end of the scale, eight local authorities had an average time to sell of two months or longer. Melton in the East Midlands topped the list at 76 days, followed by Westminster in London and Teignbridge in the south-west.
The slowdown in parts of the market has been linked to prolonged volatility in mortgage pricing, which has affected buyers attempting to secure home loans in recent months. The stop-start nature of the conflict in Iran has unsettled financial markets, with lenders responding by repeatedly adjusting the terms and pricing of mortgage deals.
Several lenders withdrew mortgage products altogether in March, as the cost of a typical home loan rose sharply amid concerns that the conflict could reignite global inflationary pressures and push the Bank of England towards further interest rate increases.
Figures from the financial data provider Moneyfacts show that the average rate on a two-year fixed residential mortgage stood at 5.61% on Monday. This compares with a rate of 4.83% before the escalation of the conflict at the end of February. The rate is reported to have peaked at close to 6% in April, before easing slightly, though volatility has continued as the situation in the Middle East remains unresolved.
The uncertainty presents a challenge for the Bank of England's rate-setters. Official inflation figures due to be published on Wednesday are expected to show that soaring energy costs pushed UK inflation up from 2.6% in June to 2.9% in July, a rise that could strengthen the case in the City for an increase in borrowing costs.
However, separate labour market data due on Tuesday is expected to show a slowdown in the jobs market, a development that could encourage the Bank to hold off from raising rates in the near term.
Financial markets are currently pricing in two quarter-point increases to the Bank's base rate, from its current level of 3.75%, before the end of next year, according to the report.
Richard Donnell, an executive director at Zoopla, said the national figures masked significant differences opening up between local housing markets. "While the national time to sell has barely moved, that stability is masking a real divide opening up between local markets," he said.
The findings suggest that while some regions, particularly in Scotland and parts of northern England, continue to see brisk demand and rapid sales, other areas are experiencing a more pronounced slowdown as buyers weigh up whether to proceed with purchases or wait for more favourable borrowing conditions.
The property market has faced a turbulent period in recent months, with mortgage pricing subject to repeated revisions as lenders respond to shifting expectations about the path of interest rates. For prospective buyers, the combination of higher borrowing costs and uncertainty over future rate movements appears to be a key factor behind the more cautious approach reflected in Zoopla's regional data.
With inflation figures and employment data both due this week, attention will now turn to how the Bank of England balances these competing pressures, and what any resulting decision on interest rates might mean for mortgage costs and the pace of the housing market in the months ahead.
