UK house prices increased by 0.9% in the 12 months to July, falling from 1.3% in June, Zoopla has revealed.

The firm’s latest house price index found that the average house price in the UK stood at £272,800, with reduced buying power and fewer sales are putting pressure on price growth.

Across this period, sales agreed dropped by 6% year-on-year, although this gap is beginning to close. Searches for homes are now 7% higher than last year, which is the strongest annual increase for 12 months.

Zoopla stated that this is an early sign that more buyers are assessing their options as Summer draws to a close, with late August and early September tending to bring more asking price reductions, as sellers adjust their expectations to attract returning buyers.

Furthermore, Zoopla said the impact of higher mortgage rates is being felt most strongly in Southern England, particularly among first-time buyers taking out longer-term mortgages.

House prices remained flat or fell across most of the South, with average prices being 0.3% lower than a year ago in the South East and 1% lower in London.

Prices continue to rise across Northern England and the Midlands, with prices increasing by 1.7% in Yorkshire and the Humber and 3.1% in the North West.

Northern Ireland continued to record the strongest annual house price growth across the national, including by 5.4%, However, this growth is also slowing.

Former RICS residential chairman, Jeremy Leaf, stated: “We are starting to see holiday returnees slowly drifting back but the market is not what it was just a few months ago.

“On the ground, modest rises in mortgage costs have reinforced the buyer’s hand and are resulting in lower offers, particularly for flats, many of which have remained unsold for some time. On the other hand, only relatively few sellers are recognising the new realities and negotiating as hard as they can to try to agree terms at what they regard as realistic.

“We know too, that listings will increase over the next few weeks bearing in mind a recent rise in appraisals which will further strengthen buying power.

“Looking forward, we don’t anticipate much change as speculation about potential Budget tax increases intensifies.”

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