‘Agents may already be in the Christmas sea…

They say Christmas hits the shops earlier each year and the same may be said for the seasonal slowdown, Zoopla suggests.

Its latest analysis claims rising interest and mortgage rates have dampened demand so many buyers are now holding off until next year, meaning the festive slowdown may start earlier than usual for property professionals.

Richard Donnell, research director at Zoopla, said: “Looking back over the past week’s activity from homebuyers on Zoopla, we see that interest from new buyers continues to weaken – down a further 8%.

“Those who haven’t managed to arrange cheaper mortgages are stepping back from the market, creating a sense that the Christmas seasonal slowdown has started early.”

He revealed that the rate at which new sales are being agreed is slowing – down 25% on this time last year, but Donnell remains positive, adding: “Sales have not stalled showing there are committed buyers in the market that want to press on and secure a sale.

“Mortgage rates are important for many buyers but life-related decisions and other pressures will continue to bring a flow of buyers and sellers into the market, albeit at a slower pace than earlier this year.”

The claims were made as part of a Zoopla blog by Donnell on reasons the housing market will hold-up despite high mortgage rates.

Beyond sales still being agreed, he highlighted that mortgage rate pricing is falling back from the highs of 6%.

He said: “Our analysis has always suggested that mortgage rates of 4% were manageable for most buyers. Rates getting to 5% of higher would be more of a tipping point with the likelihood of some localised price falls and fewer sales.

“Looking ahead, what really matters now is the outlook for inflation – in particular, how much more central banks needs to increase the base rate to bring inflation under control in the UK. We will know more in the next 2 weeks.

“As soon as we get signs that inflation is starting to peak, the financial markets should start to take a very different outlook on borrowing costs.”

Buyers do need to realise that sub-2% rates are a thing of the past and 4% may be more normal, the blog said.

Donnell suggests that there are minimal chance of negative equity, claiming that new borrowers have not relied on large mortgages to purchase homes.

He also highlights that 30% of sales are cash buyers while mor than half of homeowners don’t have a mortgage at all.