Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.

Zoopla Downgrades UK Housing Transaction Forecast Amid Rate Volatility

UK housing transactions are now expected to fall below initial forecasts for 2026, according to analysis from Zoopla. The revision comes as mortgage rate volatility and economic uncertainty continue to impact buyer activity.

Zoopla’s Executive Director, Richard Donnell, stated that sales agreed over the year are set to be lower than anticipated at the start of 2026. He highlighted that the final six months of 2025 were “very weak” due to Budget uncertainty affecting transaction levels.

Mortgage Rate Impact

The decline in market activity has been driven by fluctuating mortgage costs. Average mortgage rates rose from 4% at the start of the year to 5% in April, prompting buyers to delay purchase decisions. Donnell noted that this increase led to a decline in mortgage approvals for home purchase, as buyers adopted a wait-and-see approach to mortgage rates, which are now declining again.

Bank of England data for May 2026 showed net mortgage approvals for house purchases decreased to 56,200, below the six-month average of 63,300. Remortgage approvals also fell to 33,000 in May from 51,200 in April.

Market Outlook

Jeremy Leaf, a north London estate agent and former RICS residential chairman, described mortgage approvals as “arguably the most important of all the housing market data” due to their forward-looking nature. He observed that not only are the numbers down, but buyers are also taking longer before committing to mortgage offers. Leaf attributed this to concerns about mortgage rate direction, cost of living pressures, and ongoing conflict in Iran, all of which are delaying decision-making. Political uncertainty is also adding further caution to the market.

The outlook for housing sales in the second half of 2026 will depend on how far mortgage rates decline from current levels. While rates have begun to fall again, the pace of reduction remains uncertain as buyer preferences shift amid economic pressures. The subdued transaction environment contrasts with earlier expectations for market recovery, with affordability constraints continuing to weigh on activity levels. Industry observers expect cautious market conditions to persist in the near term, with any improvement dependent on sustained reductions in borrowing costs.