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LONDON, Nov 28 (Reuters) – British property market activity stalled in October and house price growth slowed to its lowest quarterly level since February 2020 due to a devastating “mini-budget” and cost-of-living crisis, a survey showed on Monday. .
Zooplan’s house price index said the slowdown in October was partly due to the economic plan set out by then-prime minister Liz Truss in September, which triggered a bond market selloff.
Housing activity fell sharply as mortgage rates rose as a result of the Truss scheme, which real estate group Zoopla said was “more evident in new buyer demand than agreed sales”.
Buyer demand fell 44% year-on-year in October, while sales volume was 28% lower than a year earlier, but compared to the pre-pandemic period, Zoopla said.
Zoopla said it expects yields to return to levels of 4-5% in early 2023, while 5-year fixed loan rates have eased from a peak above 6% last month.
In annual terms, house price inflation slowed to 7.8% with quarterly growth of 0.7%, the lowest rate since February 2020.
Zoopla has forecast British house price growth to move towards 0% and possibly enter negative territory next year.
“While the outlook for house prices remains subdued, we see a shift to more needs-based motivations moving into 2023 and will support sales volumes thereafter,” said Richard Donnell, executive director of Zoopla.
Rapid rent increases will add to cost-of-living pressures and add “sustained impetus” to first-time buyer demand, he added.
Despite the setbacks, the slowdown in the property sector is a “shake-out” rather than the beginning of a crash, Zoopla said.
A separate survey published on Friday showed that demand for property has shifted from buying to renting amid financial uncertainty.
Reported by Suban Abdullah; Edited by Alexander Smith
Our Standards: The Thomson Reuters Trust Principles.
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