House prices are falling in postcode areas covering 35% of UK homes, up from 12% a year ago, as higher mortgage rates and increased housing supply give buyers greater choice, according to Zoopla.

Its latest House Price Index found prices declining in 37 of the 119 postcode areas tracked, with the biggest pressure concentrated in London and the South East.

The average UK house price stands at £273,100, up 0.8% year on year, but regional differences are widening.

Average prices in London have fallen by 1%, leaving homes worth £5,400 less than a year ago, while the North West has recorded a 3.2% increase, equivalent to £6,600. Overall, 85% of homes in London and the South East are in postcode areas experiencing price falls, compared with 42% in the South West. Prices are rising by more than 3% in several more affordable areas, particularly across the North West and Scotland.

Market activity has weakened as buyers become more selective. Sales agreed over the past four weeks were 7% lower than a year earlier, while the number of homes available for sale increased by 7%, intensifying competition between sellers.

However, properties that find buyers are selling in an average of 44 days, unchanged from last year.

Zoopla said realistic asking prices were increasingly important. Its analysis of properties listed between April and June 2026 found that 41% of homes priced at least 5% below their estimated value secured a buyer within 90 days, compared with 26% of those priced at least 20% above their estimated value. Only 19% of properties that underwent a price reduction sold within 90 days, against 41% of those that did not.

Richard Donnell, executive director at Zoopla, said: “The extra cost of mortgages has made home buyers more selective while greater choice of homes for sale has increased the scope to negotiate on price. The impact is being felt by sellers in southern England where house price falls are most concentrated as average prices continue to rise across the rest of the country.

Donnell added: “Buyers have more choice and room to negotiate, particularly in southern England where house prices are falling. Homes are still selling, but realistic asking prices are essential.”

Wednesday’s Budget could provide support through changes to stamp duty and the proposed Your First Home scheme. Zoopla said extending the 2% stamp duty band to £500,000 could save home movers up to £7,500, while similar reforms for first-time buyers (FTBs) could deliver savings of up to £6,000.

Zoopla analysis indicates that the Your First Homes scheme could help up to 10% of FTBs get on the ladder. It estimates that, with appropriately set local price caps, around a third of new homes could qualify, potentially supporting up to 30,000 purchases annually, which would reduce competitive pressure on sellers.

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