By Political Certainty and Rate Drop Expectations
Political certainty following the General Election and the anticipated reduction in the Bank of England Base Rate are fostering a positive outlook for the autumn housing market. The average asking price for new sellers has dropped by 0.4% this month to £373,493, reflecting a larger-than-usual decrease for July as sellers aim to attract buyers amidst distractions such as the General Election, sports events, and summer holidays.
Key Insights from Rightmove’s Data
- Sales Activity and Seller Behavior
- Despite the General Election, market activity has remained steady. The number of sales being agreed is 15% higher than the same period last year.
- New seller entries to the market are up by 3% compared to last year, indicating resilience despite election-related uncertainty.
- Buyer Demand and Affordability Concerns
- Overall buyer demand remains stable, though there is a slight 2% drop in the first-time buyer sector, likely due to affordability pressures.
- The average five-year fixed mortgage rate is now 4.97%, lower than the peak of 6.11% in July 2023 but significantly higher than the 2.51% average in July 2021.
- Future Outlook and Base Rate Cut
- The financial markets anticipate a Base Rate cut as early as August or September, which could further boost market sentiment and activity in the autumn.
- This potential rate cut, coupled with political stability, could improve affordability and increase buyer confidence.
Expert Opinions
Tim Bannister, Rightmove’s Director of Property Science:
- The market’s positive response to the new government and expected monetary policy changes indicates a potentially robust autumn market.
- The reduction in the Base Rate could significantly lower mortgage rates, enhancing affordability for buyers.
Matt Nicol, Managing Director at Nicol & Co. in Worcestershire:
- The market has remained healthy with balanced supply and demand, despite political and economic challenges.
- Optimism remains high for the second half of 2024, bolstered by potential Base Rate cuts and government initiatives to improve the housing sector.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Most of our buyers and sellers regarded the election as an unwelcome diversion which only added uncertainty and delays.
“The contrast between the ‘why?’ and the ‘why not?’ approach to moving since 4 July has been quite marked in our offices.
“This survey has proved to be a reliable identifier of market health and confirms what we’ve seen too since the number of listings began to increase a few months ago – competitively-priced properties are attracting most attention.
“Of course, asking prices are not values but aspirational starting points which determine whether genuine buyers are attracted.”
Tomer Aboody, director of specialist lender MT Finance, says: “With the election now done and dusted, the market can focus going forward.
“A steady flow of transactions, despite interest rates still not coming down, is helping the market keep momentum but some help will be needed going forward. Potentially, this could take the form of stamp duty amendments, especially aimed at helping first-time buyers and families buy their next home. Will we see a Labour government implement these, only time will tell, but an extra push would definitely be welcome.”
Conclusion
The combination of political certainty and the expected Base Rate cut positions the residential property market for a positive autumn. The steady market activity despite recent challenges, coupled with improved affordability and buyer confidence, sets a promising backdrop for the months ahead.
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