The average UK house price has now fallen by 1.3% in the last six months, according to the latest Zoopla House Price Index.

In recent months, however, the rate of monthly price falls has slowed as buyer confidence has improved.

Property market expert Zoopla revealed that house sales also increased in response to falling mortgage rates and a strong labour market. The annual rate of price inflation is now 1.9%, down from 9.6% a year ago. At a regional level, house price inflation ranges from -0.2% in London to 3.6% in Wales.

Zoopla stated that it expects expect prices to remain “broadly static” for the rest of the year.

However, higher-than-expected inflation data has increased the probability of further interest rate rises. Zoopla suggested this will have a knock-on effect on mortgage rates which appear “likely to edge higher” in the coming weeks. This would reduce buying power and demand for homes in H2 and the impact depends on how much rates increase.

The biggest hit to housing activity in 2023 will be seen in the number of housing sales, the index also revealed, which are on track to be 20% lower than last year.

Executive director – research at Zoopla, Richard Donnell, said: “Falling mortgage rates In H1 2023 have supported increased market activity. Expectations that interest rates need to rise further to control inflation will push up mortgage rates. This is likely to result in weaker demand and levels of market activity in H2 2023.”

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