House price growth in the United Kingdom has slowed to its weakest pace in two years amid rising mortgage costs and a growing number of unsold properties, recent data indicates. According to Zoopla, the property search website, the volume of homes available for sale has increased by 5 percent compared to the same period last year, while agreed sales have declined by 9 percent.

This widening gap between supply and demand is exerting downward pressure on house prices. Zoopla estimates that average house price inflation over the past year has been just 0.8 percent, marking the lowest increase recorded since mid-2024. The data aligns with reports from lenders, estate agents, and housebuilders, which have all pointed to a particularly sluggish housing market this summer.

While seasonal factors such as hot weather and the FIFA World Cup have been cited by some industry observers, Zoopla executive director Richard Donnell attributes the main driver to elevated mortgage rates. Mortgage interest rates have reached a three-year high of 5.2 percent, leading to a typical monthly repayment increase of approximately £150 since early 2026, when rates hovered around 4 percent.

Donnell noted that borrowing costs are expected to remain high, further restraining house price growth. Zoopla forecasts a modest rise in house prices of around 0.5 percent for the calendar year. The property market also demonstrates regional and sectoral disparities, with prices declining in London and the south of England, where buyer demand has weakened most against the supply of available properties. Conversely, prices continue to grow steadily in Scotland and northern England, where affordability is less strained and average prices are lower.

The slowdown also reflects broader economic uncertainties, including the impact of the ongoing conflict in the Middle East which began in late February. Rising energy prices linked to the conflict have contributed to increased mortgage rates and subdued housing market activity. Bank of England figures published recently revealed a dip in mortgage approvals, with 54,918 approvals recorded in August, down from 55,928 in July and below analysts’ projections of 56,100. The average interest rate on newly issued mortgages climbed to 4.6 percent in August, up from 4.45 percent in July, while rates on outstanding mortgages edged higher to 4 percent from 3.97 percent.

In response to affordability challenges, Greater Manchester Mayor Andy Burnham announced a new initiative called Your First Home, a government-backed scheme designed to help first-time buyers overcome deposit hurdles, similar in concept to the earlier Help to Buy programme. Meanwhile, data shows that approximately 25 percent of newly listed homes on Zoopla this month had previously been on the market without selling, with 60 percent of these relisted properties now reduced in price.

Overall, the combination of higher borrowing costs, geopolitical tensions, and shifting regional dynamics signals continued pressure on the UK housing market as it approaches the final quarter of the year.