Annual house price growth has slowed to 0.8%, its weakest level for more than two years, as higher mortgage rates put buyers in a stronger negotiating position.
The average UK home now stands at £273,000, according to the latest Zoopla House Price Index. However, Zoopla expects annual growth to weaken further to around 0.5% by the end of the year.
Higher borrowing costs are weighing on demand. Average mortgage rates have climbed to 5.2%, their highest level in three years.
The increase has added around £150 a month – £1,800 a year – to typical mortgage repayments compared with the start of 2026.
Sales agreed over the past four weeks are 9% lower than a year ago. At the same time, the number of homes for sale has increased by 5%.
The combination is giving buyers more choice and putting greater pressure on sellers to price realistically.
Buyers have more choice
The gap between supply and demand is particularly pronounced across London and southern England.
Stock in these markets is 8% higher than a year ago. Meanwhile, sales have fallen across every region and country of the UK.
The West Midlands recorded the largest decline in sales agreed, down 15% year-on-year. The East of England followed with a 14% fall.
Scotland has proved more resilient, with sales agreed down just 1% and available stock up 3%.
Around three-quarters of Scottish homes find a buyer within three months. That compares with roughly half across northern England and just three in ten in London.
Sellers return with lower asking prices
Some sellers are also having a second attempt at finding a buyer.
A quarter of homes newly listed in September had previously appeared on the market during the past year.
Of those returning properties, six in ten have come back with a lower asking price.
Relistings are particularly common among flats and larger houses, which are generally taking longer to sell.
In London, a third of flats coming to market have previously appeared for sale. In Scotland, the proportion is below one in ten.
Flat prices fall for 15th consecutive month
The slowdown is also exposing a widening divide between houses and flats.
UK flat prices have now fallen for 15 consecutive months, with values down 1.3% year-on-year.
House prices remain 1.3% higher nationally. However, growth has slowed as higher borrowing costs constrain buyers.
Regional differences remain significant.
House prices rose 6.7% in Northern Ireland, 3.6% in the North West and 3.3% in Scotland.
By contrast, house prices fell 0.3% in the South East and 0.2% in the South West.
Flat prices are falling across most regions. Scotland and the North East are the main exceptions.
Zoopla expects growth to fall to 0.5%
Zoopla expects annual house price growth to slow to around 0.5% by the end of the year.
It also forecasts approximately 1.1 million UK property sales in 2026, down from 1.2 million last year.
Richard Donnell, executive director at Zoopla, said: “The Middle East conflict has pushed up energy prices and mortgage rates, tempering the autumn rebound in housing activity. Borrowing costs are likely to remain elevated, with house price inflation drifting towards 0.5 per cent by year-end and annual sales expected to be closer to 1.1 million versus 1.2 last year.
“While key measures of housing market activity are lower than last year, there is still plenty of demand for homes. Buyers are simply more cautious and selective about what they view and offer.
“Sellers who factor in local market conditions and seek detailed advice from their local estate agents on how to set the asking price, can still find a buyer relatively quickly.
“Getting the right price from the outset is essential. If you are selling an affordable two or three bed home in the North of England it is a strong market. The most challenging pricing decisions face sellers of flats and larger houses across southern England.”
