Demand for homes has increased for the first time since spring, with 12% more buyers in the market over the last four weeks, Zoopla’s house price index (HPI) has found.

However, despite the increase in buyers, demand remains a third lower than a year previously.

Zoopla said that buyers appear to be unwilling to compromise on the size of the property that they are looking for, despite having 20% less buying power due to higher mortgage rates.

With this in mind, would-be buyers are waiting for a fall in house prices, which have dropped by 0.5% in the past 12 months, or mortgage rates to return to the market.

Furthermore, Zoopla has said that the buyer’s market continues to prevail, with 80% more homes available for sale in comparison to September 2021. The average discount to asking price for a newly agreed sale now stands at 4.2% or £12,125.

The HPI also found that demand has been improving across all UK regions, noticeably in the South, where enquiries for homes have been weakest throughout 2023. Demand is up 19% in the South East over the past three weeks, and 16% in London.

The number of new sales agreed has also increased and is closely tracking 2019 levels.

Executive director at Zoopla, Richard Donnell, said: “The housing market continues to adjust to a higher mortgage rate environment. Better news on inflation and the end of base rate increases has provided scope for lenders to start reducing mortgage rates which has supported a modest uptick in demand for homes this September. Buyers continue to remain cautious and many are waiting for better value for money and improved affordability from lower house prices or further falls in mortgage rates before returning to the market.

“House price falls have been modest with the average house still 17% more expensive than before the start of the pandemic. Forbearance by lenders, tougher mortgage regulations over recent years and a strong labour market appear to have moderated the stress in the market compared to previous cycles that would have driven larger price reductions.

“House prices will continue to drift lower, especially in southern England, ending the year 2 to 3% lower meaning falling mortgage rates are required to boost activity and attract buyers back into the market.”

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