House price falls spread as growing supply puts sellers under pressure

More than a third of UK homes are now in areas where house prices are falling. Meanwhile, rising stock levels and weaker sales activity are putting sellers under growing pressure.

Zoopla’s latest House Price Index reveals that 35% of homes are in postcode areas recording annual price declines. That compares with just 12% a year ago.

Overall, the portal found prices falling in 37 of the 119 postcode areas it monitors.

Meanwhile, buyers have more choice. Sales agreed over the past four weeks have fallen 7% year-on-year, while the number of homes for sale has increased 7%.

As a result, sellers face greater competition and buyers have more room to negotiate.

Higher mortgage rates are also making buyers more selective. Consequently, agents face a tougher task when advising vendors on asking prices.

Despite the slowdown, average UK house prices remain 0.8% higher than a year ago at £273,100. However, the national figure masks a widening regional divide.

London and South East bear brunt of price falls

Southern England faces the greatest pressure. In fact, 85% of homes in London and the South East are in postcode areas recording price declines.

In London, average prices have fallen 1% over the past year to £523,100. That represents a £5,400 drop.

Similarly, the South East has recorded a 0.6% decline, while prices in the Eastern region have fallen 0.5%.

However, some local markets have experienced considerably sharper falls.

Prices have dropped 5.7% in the WC London postcode area and 2.2% in North West London.

Elsewhere, Truro has recorded a 2.2% decline. Bournemouth and Torquay have both seen falls of 1.7%.

In contrast, house prices continue to rise across more affordable regions.

Average prices in the North West have risen 3.2%, adding £6,600 to property values over the past year.

Meanwhile, Northern Ireland recorded the strongest regional growth at 5.8%. Scotland followed with annual growth of 2.5%.

Overpriced homes struggle to attract buyers

Despite weaker sales activity, homes that secure a buyer are taking an average of 44 days to sell. That matches last year’s pace.

However, Zoopla’s analysis suggests initial asking prices are becoming increasingly important.

Of homes listed between April and June 2026, 41% of those priced at least 5% below their estimated value found buyers within 90 days.

By comparison, just 26% of homes marketed at least 20% above their estimated value secured buyers during the same period.

Furthermore, reducing an asking price later offers no guarantee of success.

Only 19% of homes that underwent a price reduction sold within 90 days. In contrast, the figure was 41% among properties without a reduction.

As a result, agents face growing pressure to secure realistic asking prices from the outset.

Richard Donnell, executive director at Zoopla, said: “The extra cost of mortgages has made home buyers more selective while greater choice of homes for sale has increased the scope to negotiate on price.

“The impact is being felt by sellers in southern England where house price falls are most concentrated as average prices continue to rise across the rest of the country.”

He added: “Getting the price right from the start is essential. Overpricing significantly reduces the chances of selling, so sellers should seek advice from local agents on buyer demand and the right asking price for their home.”

Meanwhile, Nathan Emerson, CEO at Propertymark, said the figures highlighted growing differences between local housing markets.

“The housing market is becoming increasingly localised, with higher mortgage costs putting pressure on affordability, particularly in southern England,” he said.

“While increased choice is giving buyers greater scope to negotiate, realistic pricing and informed advice from property professionals remain essential to achieving successful sales.

“Despite regional price falls, demand remains, but buyers are increasingly selective and focused on value. Ultimately, market confidence will depend on improved affordability, access to suitable housing and the ability of buyers and sellers to move with confidence.”

Tom Bill, head of UK residential research at Knight Frank, also warned that sellers must adjust their expectations.

He said: “Sellers increasingly need to reflect the tougher mortgage rate landscape when setting asking prices.

“Buyers’ budgets are being squeezed as the Middle East conflict sends borrowing costs higher, but the overall number of mortgage approvals has also fallen, which has weakened demand further.

“Price growth has effectively ground to a halt this year and we expect the downward pressure to continue in the final months of the year, which may be aggravated by this week’s Budget.”

Budget could offer relief to southern markets

The findings come ahead of Wednesday’s Budget. Against this backdrop, Zoopla is calling for stamp duty reforms to ease transaction costs.

The portal estimates that extending the 2% stamp duty band to £500,000 could save home movers up to £7,500.

Similarly, changes for first-time buyers could deliver savings of up to £6,000. However, both measures would reduce Treasury revenues.

Zoopla also believes the proposed Your First Home scheme could support new-build demand.

Under suitable local price caps, the portal estimates that around a third of new homes could qualify.

Consequently, the scheme could support up to 30,000 purchases annually. That would represent around 10% of first-time buyer transactions.

Donnell said: “The biggest boost the Budget could provide to the housing market would be to create the conditions for lower mortgage rates.

“We expect activity to strengthen once mortgage rates start moving back below five per cent.”

Regional house price changes – September 2026

Source: Zoopla House Price Index, September 2026.