UK house prices increased by 8.3% over the 12 months to July 2022, said Zoopla.

That’s an annual rise of £19,800 on the typical home, according to the property portal.

However, it noted that demand is beginning to weaken as mortgage rates rise and the increasing cost of living begins to bite. Buyer demand is now lower than a year ago but still above the five-year average trend.

Extra cost of borrowing

Mortgage rates for new buyers have risen to around 4%, which Zoopla said means the average first-time buyer will need an extra £12,250 to buy a home today compared to a year ago. If they buy in London they will need to find up to £35,000 more.

It’s also taking longer to sell a home – 22 days compared to 19 days in April, as the market starts to slow slightly.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The property market may not be as safe as houses, because while annual price rises are still impressive, there are signs of weakness creeping in. Demand is getting shakier, and the first-time buyers who have been propping the market up are feeling the strain.

“First-time buyers are the engines of the housing market, particularly at the moment when they make up just over a third of all sales. When they get cold feet, it seizes up the rest of the market, so those who want to move up their ladder find it impossible to shift their old property, and are stuck in limbo.”

Regional splits

Zoopla found that the South West and Wales are jointly the best performing regions, with annual house price growth of 10.6%.

In terms of cities, Nottingham, Bournemouth, Leeds and Manchester lead the way with house price growth. They’ve all had 9% or higher price growth in the last 12 months.

Richard Donnell, director of research and data at Zoopla, said: “While mortgage rates are set to double over 2022 we don’t anticipate any widespread falls in house prices.

“While the rising rates and cost of living pressures are sure to be on households’ minds, we’re not seeing any big impacts on the market yet. The lasting effects of the pandemic are still a big influence on home moving decisions and house price growth.”