Three in five homes listed for sale since January remained unsold at the end of June, with higher mortgage rates and political uncertainty continuing to dampen buyer activity across the UK housing market, according to Zoopla’s latest house price index (HPI).

Sales agreed over the four weeks to 21 June were 7% lower than a year earlier, while buyer demand fell 15% year-on-year as prospective movers delayed decisions amid rising borrowing costs and uncertainty over the political and economic outlook.

The HPI also revealed that mortgage rates reaching 5% in April added an average of £125 a month to mortgage repayments, although the impact varied significantly by region. London remained under the greatest pressure, with average monthly costs for first-time-buyers (FTBs) rising by £232, compared with £66 in the North East.

Regional trends showed a widening divide across the market.

Wales recorded the steepest fall in sales agreed at 12%, followed by the East Midlands at 11%, while buyer demand dropped most sharply in the West Midlands, down 30%.

House price inflation remained positive, but continued to slow, easing to 1.4% year-on-year. Northern regions proved more resilient, with prices in the North East and North West rising 3.5%, while London recorded its ninth consecutive month of annual price declines, falling 0.2%.

Zoopla argued that affordability pressures were particularly acute for flat buyers and FTBs, with more than two-thirds of one and two-bedroom flats listed this year still unsold.

Richard Donnell, executive director at Zoopla, said: "Higher mortgage rates have hit sales and squeezed affordability, but the market is not moving at one speed. The national picture can only tell you so much, and local market conditions vary considerably across the country."

Commenting on the index, Chris Hodgkinson, managing director of House Buyer Bureau, said: "While market conditions have undoubtedly become more challenging, we're far from seeing the sort of freeze witnessed after the 2022 mini-budget. Buyers are still active, but they're taking a far more measured approach and won't be rushed into paying over the odds. For sellers, this means speedy sales are no longer guaranteed on the open market, and will be powerfully influenced by price expectation."

Marc von Grundherr, director of Benham and Reeves, added: "The market is still moving, but sellers can no longer rely on yesterday's pricing and timeline expectations. Those who price sensibly from the outset will continue to attract serious buyers, while those chasing last year's values risk watching their property linger on the market."

In its outlook, Zoopla expected annual house price inflation to soften towards 1% in the second half of 2026 unless mortgage rates fall below 4.5%. The FTB segment is the most rate-sensitive and London FTBs are the most squeezed and this is where any further rate falls will have the most immediate impact on demand and activity.

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