Housing Market Braces for Impact of Imminent Rate Decrease

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The average asking price for homes has decreased by 0.4% over the past month, according to Rightmove. This drop is more significant than the 20-year July average decline of 0.2%. Sellers are adjusting prices to attract buyers during the busy summer holidays and the upcoming Olympics, hoping to generate interest.

Encouragingly, the number of sales agreed is now 15% higher than the same period last year, approaching the peak of mortgage rates. This marks a notable increase compared to last month, which reported sales at 6% above last year’s figures. As the market adjusts, these trends suggest a more competitive environment for both buyers and sellers.

Recent sales figures indicate that serious homebuyers are largely unaffected by the General Election, as they continue to move forward with their plans. This is reflected in the 3% increase in new sellers entering the market over the past four weeks compared to last year, demonstrating that the majority of movers are not deterred by the uncertainty surrounding the election.

Despite the seasonal distractions, including the General Election campaign and the Euro football tournament, the housing market is showing resilience. Overall, property prices have remained stable, currently sitting at 0.4% higher than this time last year. This stability suggests that while there are external factors at play, many buyers and sellers are focused on their housing goals and are navigating these challenges effectively.

As we move through the summer months, it will be interesting to see how these dynamics evolve, but for now, the outlook remains positive for both buyers and sellers in the market.

Despite concerns that the General Election campaign would slow down home-moving activity, Rightmove’s extensive data shows that most people have continued with their plans since the election was announced. The clarity provided by the new government is expected to boost homebuyer confidence as we move into the second half of the year.

However, homebuyers remain concerned about when the first interest rate cut will occur, as high mortgage rates continue to challenge affordability.

A spokesperson for Rightmove noted that at the beginning of the year, three main uncertainties affected the property market: the timing of the first interest rate cut, the General Election timing, and its outcome. With the new government in place, which has a strong majority, we anticipate this will enhance confidence among home movers.

“It’s still early, but the new Chancellor’s announcements on housebuilding targets and planning reforms are encouraging signs that the government is committed to its promises. With several areas needing improvement, we hope the new administration will implement effective housing policies that benefit the market in the long run.

One area requiring more attention is first-time buyers, many of whom are struggling with high mortgage rates and may face increased stamp duty fees as the current thresholds change in March 2025.

A significant concern for many home movers is the timing of the first Bank of England Base Rate cut, with indications that some are waiting for this change before making any decisions.”

Overall buyer demand, reflected in the number of potential buyers contacting estate agents, has remained steady over the past four weeks compared to last year. However, there has been a slight decrease of 2% in demand among first-time buyers, many of whom are hoping for rate cuts to improve their affordability.

On a positive note for home-movers, financial markets anticipate the first Base Rate cut to occur in August or September, according to Rightmove. While this expectation may change, it could provide a boost for both home-movers and market sentiment as autumn approaches. Rightmove’s weekly mortgage tracker indicates that the average five-year fixed rate is currently 4.97%, which is better than the peak of 6.11% in July 2023 but still significantly higher than the 2.51% average in July 2021, prior to a series of 14 consecutive Base Rate increases. With political stability and a potential rate cut on the horizon, the autumn market could see a positive shift.

A spokesperson for the portal said, “A Base Rate cut is expected to result in lower mortgage rates, which could greatly benefit potential home-movers currently struggling with high monthly costs.

“The average five-year fixed rate is still almost double what it was before the Bank of England began its series of 14 consecutive rate increases in 2021, and rates have remained high for longer than anticipated.

“A first Base Rate cut in over four years, combined with new political stability, could create a positive autumn market, improving affordability and boosting confidence in the second half of the year.”