Following the Bank of England’s recent decision to cut interest rates, the housing market has seen a surge in activity, according to a report by leading property website Rightmove. The report found that estate agents have experienced a 19% increase in enquiries about properties for sale since 1 August, compared to the same period last year.
The Bank’s decision to cut rates for the first time in over four years, from 5.25% to 5%, has had a positive impact on buyer sentiment. Rightmove’s Tim Bannister stated, “It is clear that the Bank’s decision has sparked a welcome late summer boost in buyer activity.” He further added, “While mortgage rates have not significantly decreased since the rate cut, the fact that it has finally happened and rates are heading downwards is a positive sign for home-mover sentiment.”
Rightmove also noted that the housing market had been slow in 2023 due to high rates, but the 11% increase in enquiries in July and the significant surge in August’s figures indicate a promising outlook for the market. The average interest rate on a five-year fixed-rate mortgage has also decreased from 5.82% to 4.8% since the Bank’s decision to raise rates to 5.25% a year ago.
In addition, Rightmove reported that the average asking price for properties has fallen by 1.5% to £367,785, representing a £5,708 monthly drop, between 7 July and 10 August. However, this decrease is seasonal and has been a trend for the past 18 years, as sellers typically put their moving plans on hold during the summer to go on holiday.
Nathan Emerson, chief executive of estate agent body Propertymark, commented on the current state of the housing market, stating, “What the housing market urgently needs is a confidence boost following three years of economic disruption.” He further added that if inflation continues to fall, it would be beneficial for the Bank of England to use this opportunity to further cut interest rates, especially as the recent rate cut has already spurred some activity in the housing market.
Rightmove has also revised its forecast for house prices for the year, now predicting a 1% increase due to “positive market data and trends compared to the more subdued 2023.” Previously, the property website had predicted a 1% decrease in prices for 2024.
According to data from the London Stock Exchange on Monday morning, financial markets have predicted a 31% chance of the Bank cutting interest rates again at its next meeting in September. However, there is an 82% chance of a cut in November. This comes after the official rate of inflation rose to 2.2% in July, the first increase in six months.
