More positive signs for the UK housing market have been revealed in Rightmove’s latest house price index, with August set to be a “pivotal” month.
In what property portal Rightmove has described as an 18-year trend, new seller asking prices came down slightly in August, with the size of the drop in line with the long-term average. It brings the average property asking price to £367,785.
However, thanks to the Bank of England’s recent long-awaited decision to cut the base rate from 5.25% to 5% at the start of this month, the UK housing market has already seen a surge in buyer interest as optimism abounds and people look to get their transactions moving.
The number of prospective buyers contacting estate agents to arrange viewings is now 19% higher than it was this time last year, showing a marked recovery from the more subdued state of the UK housing market in 2023. In particular, July saw the biggest monthly surge ahead of the highly anticipated interest rate cut.
Despite the slight seasonal dip, by the end of this year the property portal now expects the average house price to have increased by 1%, as opposed to its previous prediction of a -1% reduction. Of course, across the various regions and individual pockets, performance will vary greatly, with the north of England generally bucking the trend.
Positive signs for UK housing market
There are other strong positive markers for the UK housing market right now that show that both buyers and sellers are feeling more confident about the sector.
Rightmove’s analysis shows that the number of sales being agreed across the UK is 16% higher than it was a year ago, which was when mortgage rates were close to their peak.
What’s more, there’s been a 5% rise in the number of new sellers coming to the market compared with 12 months ago, who are likely to enjoy what Rightmove’s Tim Bannister describes as a “buyer buzz” around the market at the moment, thanks to improving economic conditions and a better interest rate outlook.
The mortgage market plays a big role here, and this has also improved greatly from last year, again spurring on the UK housing market. The average five-year fixed rate, according to Rightmove’s tracker, is now 4.80%, down from 5.82% this time last year, while the best available five-year fix is 3.83% if you’ve got a 40% deposit.
“The scene is set”
Despite the looming Autumn Budget, which could bring about some changes for the UK housing market under the new Labour government, as well as speculation over any further Bank of England interest rate cuts and wider economic performance, activity so far this year appears to put the sector in good stead for the rest of 2024.
Bannister notes that “the scene is now set for a positive remainder of the year”, with more positive sentiment among both buyers and sellers – particularly as the mortgage market continues to see more competitive rates and products being introduced.
Regionally, the North East, Yorkshire and the Humber, and the North West all remain ahead of the pack when it comes to annual house price rises, with increases of 3.6%, 3.5% and 3% respectively. This is markedly ahead of the UK average, and forecasts indicate these regions will remain the strongest in the coming months.
Knight Frank predicts stronger price growth
With a more positive end-of-year forecast than Rightmove, Knight Frank predicts that, under current and expected conditions, the UK housing market will see overall price growth of 3% by the end of the year. Again, certain regions are expected to outperform this figure, while others may hold it back.
Commenting on Rightmove’s latest index, Tom Bill, head of UK residential research at Knight Frank, said: “Despite being a quiet time for the UK housing market, August could prove to be a pivotal month this year following a rate cut and better-than-expected inflation numbers.
“Markets are pricing in a further cut in 2024, which means transaction volumes should be stronger this autumn than last year.”
“That said, uncertainty surrounding the Budget and wave of people rolling off favourable mortgage deals will keep a lid on price growth, which we expect to be 3% in the UK this year.”
