Homebuyers are returning to the property market after a quiet summer, but higher mortgage rates have cut their buying power by 9% since the start of the year.
The latest Zoopla House Price Index shows the number of people searching for homes has risen by 7% compared with a year ago, with searches increasing in every region for the first time since August 2025.
The strongest growth in property searches has been recorded in the South East, where searches were up 8.9%, followed by the East of England at 8.5%. The North West has recorded a more modest 0.7% increase.
Higher borrowing costs
The pick-up in buyer activity comes despite a sharp increase in borrowing costs during 2026. Average five-year fixed mortgage rates have risen from below 4% in January to around 4.8%, reducing the amount buyers can borrow without increasing their monthly repayments.
Zoopla calculates that someone able to afford a £200,000 mortgage at the beginning of the year could now borrow around £182,000 for the same monthly payment, a reduction of 9%.
For buyers who can’t or do not want to increase their monthly mortgage costs, bridging that gap requires a larger deposit. Based on the average property price, Zoopla estimates buyers now need an additional £18,200 compared with January.
Regional differences
There are marked regional differences. In London, where average property prices are much higher, buyers would require an additional £35,500, compared with £10,200 in the North East.
Higher borrowing costs have weighed on transactions over the summer, with sales agreed still 6% lower than a year ago. However, Zoopla says the gap is beginning to narrow as more buyers return to the market.
More choice
And those buyers have greater choice than they did last year. The total number of homes available for sale is 5% higher, which is helping to keep price growth subdued and giving buyers greater scope to negotiate.
Annual UK house price growth slowed to 0.9% in July, down from 1.3% in June, taking the average property price to £272,800.
There is, though, a clear North-South divide. Prices are flat or falling throughout much of southern England, including a 1% annual decline in London and a 0.3% fall in the South East.
In contrast, prices have risen by 3.1% in the North West, where the average home costs £210,100, and by 2.5% in the North East. Yorkshire and the Humber has recorded growth of 1.7%, while the West Midlands is up 1.5%. Northern Ireland has seen the strongest growth at 5.4%.
Buyers assessing their options
Richard Donnell, executive director at Zoopla, says: “Many buyers have taken a ‘wait and see’ approach over the summer months in response to higher borrowing costs and political uncertainty. The low point for activity was mid-July around the time of the World Cup final. Since then we have seen a steady increase in the number of people searching for a home, assessing their options ahead of the post-holiday rebound in sales market activity.
“Average mortgage rates have stabilised but remain closer to 5% than 4%, meaning affordability remains an important factor for many home buyers choosing their next home. Buyers have plenty of choice this autumn and will be able to make competitive bids for homes.”
And Nathan Emerson, chief executive of Propertymark, the professional body for estate and letting agents, adds: “The return of demand is encouraging, but affordability remains the biggest barrier to a sustainable recovery.”
