Residential property prices are continuing to fall, newly released figures show, but transactions are ahead of the long-term average due in part to a surge in the number of buy-to-let landlords selling up.

According to fresh data from Zoopla, landlords selling homes are adding to supply, accounting for 11% of properties for sale, as many property investors struggle to make a profit, amid higher mortgage rates and energy bills.

“Sellers shouldn’t get carried away by more positive data on the housing market and need to price their homes realistically if they are serious about moving home in 2023,” Richard Donnell, executive director at Zoopla said.

“Home buyers remain price sensitive with one eye firmly on the outlook for the economy, the cost of living and the trajectory of mortgage rates which appear likely to edge higher in the coming weeks,” Donnell added.

It comes as the average price of a home in the UK has increased by 1.9% year-on-year, now costing £260,000. But this masks a 1.3% drop in the average price if a home over the past six months.

Property prices in London contracted by 0.2% year-on-year, with the average price of a home in the capital now priced at an average of £523,000.

Guy Gittins, CEO of Foxtons, commented: “The market dynamic for sales rebounded much stronger than many had forecast at the start of the year, after a period of inactivity following the government’s mini budget.

“This demand for London property is caused by the backlog of needs-based buyers who were looking to move following COVID-19, which was so great it has yet to be satisfied, despite the increased cost to buy. As well, given the extreme supply and demand imbalance in the lettings market, more renters who are in a position to buy have accelerated their search.

“New buyer activity has led to consistently higher viewing numbers than we have seen at any point in the last six years. In fact, our buyer numbers year to date are tracking very closely with the buyer numbers this time last year, which most people would refer to as the most buoyant market we’ve seen since 2016. Our growing pipeline of business gives us every expectation that the rest of this year will continue along this positive track.”

Matt Thompson, head of sales at Chestertons, added: “Compared to the national picture, London is very much a micro-market that continuously attracts a wide range of buyer demographics. Despite economic uncertainty, the year started with an incredibly high number of house hunters wanting to find a property. This demand has only grown stronger over the past few weeks, especially with the introduction of more attractive mortgage products including the 100% mortgage.

“The strong buyer demand that London experiences has and will continue to contribute to the majority of the capital’s properties holding their value and, in some particularly sought-after neighbourhoods, allow sellers to be insistent on their asking price without allowing room for negotiation.”