House prices fall in a third of postcodes as high mortgage rates continue to bite

House prices have fallen in a third of British neighbourhoods in the past year as high mortgage costs put people off moving. Property website Zoopla said 35 per cent of homes are now in postcode areas where house prices are falling, up from 12 per cent a year ago. The losses are concentrated in London and the South East, where 85 per cent of homes are in postcodes where prices are falling. However, the falls are modest with the average London home losing £5,400. Prices are still rising across most other regions with average prices £6,600 higher in the North West over the last year.Three-quarters of postcodes in the East of England are seeing price falls, according to Zoopla, along with 42 per cent of postcodes in the South West.Higher mortgage rates have increased the cost of buying and made some buyers more selective while others have been put off completely. Tough market: House prices are falling in more than a third of British postcodes, Zoopla saysExclusive analysis by This is Money found the mortgage needed to buy a home with a 20 per cent deposit is currently 64 per cent more expensive than it was five years ago.This means the number of sales is falling. Sales agreed over the last four weeks were 7 per cent lower than a year ago, Zoopla said.Meanwhile the number of homes for sale is 7 per cent higher than last year, meaning buyers are in a position to negotiate large discounts. While prices are falling across 35 per cent of Britain, the average house price remains slightly higher than a year ago at £273,100. This is 0.8 per cent higher than the same time last year.The biggest price falls were seen in north-west London, where values are down 2.2 per cent on average and west central London where values are down 5.7 per cent.Along the south coast prices are also falling, including Torquay and Bournemouth, down 1.7 per cent and Truro where values have fallen 2.2 per cent. There are still areas of the country where home values are rising by more than 3 per cent, particularly across the North West and Scotland. House prices are rising by more than 4 per cent in Liverpool, Carlisle and Kilmarnock postcode areas. Richard Donnell, executive director at Zoopla, said: 'There is still demand to buy homes, and those that are well priced and presented are selling just as quickly as last year. Getting the price right from the start is essential. 'Overpricing significantly reduces the chances of selling, so sellers should seek advice from local agents on buyer demand and the right asking price for their home.' Will the Budget boost the housing market? There are likely to be more details about the Government's proposed Your First Home scheme in the Budget.The scheme will give first-time buyers the opportunity to buy a new build home with a 2.5 per cent deposit.They will be offered an equity loan worth up to 20 per cent of the property's value, cutting mortgage costs in the first few years of home ownership – though it will only be interest-free for a limited period.This could boost demand for new homes by helping first-time buyers with limited deposits. It has been reported that a £500,000 maximum house price cap could be applied, but details are yet to be confirmed. In the last years of the similar Help to Buy scheme, different price caps were applied to different areas. Zoopla estimates that, with appropriately set local price caps, around a third of new homes could qualify, potentially supporting up to 30,000 purchases annually, equivalent to one in ten first-time buyer purchases. Zoopla's Donnell says: 'The Your First Home scheme is positive for the new homes industry and, if designed well, could stimulate demand and support wider housing market activity in 2027.'However, he added that 'the biggest boost the Budget could provide to the housing market would be to create the conditions for lower mortgage rates'.He said the housing market would improve once average mortgage rates, currently close to 6 per cent, went below 5 per cent. Annual change in house price: Bournemouth and Cambridge saw falls of 1.8 and 1.7% respectively over the yearHow to find a new mortgage Mortgage rates have jumped as conflict with Iran has driven up inflation expectations and dashed hopes of interest rate cuts.If you need a mortgage because you are buying a home, or your current fixed rate deal is due to end, you should explore your options as soon as possible. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with expert mortgage advice.Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.Or use L&C’s online Mortgage Finder to search thousands of deals from more than 90 different lenders to discover the best deal for you.Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage