"A first Base Rate cut for over four years, together with the new political certainty, could set the scene for a positive Autumn market"
- Tim Bannister, Rightmove’s director of property
The average price of property coming to the market for sale dropped by 0.4% this month, a bigger July drop than usual, as new sellers try to cut through the distractions of the General Election, sporting events and summer holiday season with a tempting price, according to the latest Rightmove research.
Home-movers are dealing with more diversions than normal at this time of year, having just come through the distractions of the General Election campaign and the Euro football tournament, but prices remain stable overall at 0.4% higher than a year ago.
Despite some concerns that the General Election campaign would lead to a significant slowdown in home-moving activity, Rightmove says the vast majority of people have been getting on with their moves since the election was called. The political certainty of having the next government in place is likely to aid home-mover confidence heading into the second half of the year.
The number of sales being agreed is now an encouraging 15% above the same period a year ago, when we were approaching the peak of mortgage rates. This compares to last month’s figure which was 6% above last year. Similarly, the number of new sellers coming to market in the last four weeks is a steady 3% above last year.
A key concern for many home-movers is when the first Bank of England Base Rate cut will be, and there are signs that some pockets of movers are waiting for this before acting. Overall buyer demand, measured by the number of would-be buyers contacting estate agents about homes for sale, has remained stable in the last four weeks when compared with this time last year. However, there’s a slight drop (-2%) in buyer demand in the particularly affordability-stretched first-time buyer sector, as some look to rate cuts to improve their affordability.
Some good news for home-movers is that the financial markets expect that the first Base Rate cut will be in August or September. Though this expectation could change over the coming weeks, it would be a boost for home-movers and market sentiment leading into Autumn. Rightmove’s weekly mortgage tracker shows that the average five-year fixed rate is now 4.97%, which while improved from the peak of 6.11% in July 2023, is still much higher than the average of 2.51% in July 2021, before the first of 14 consecutive Base Rate increases.
Political certainty and a first rate cut for four years could together set the backdrop for a positive Autumn market, Rightmove believes.
Tim Bannister, Rightmove’s director of property, commented: "Three major uncertainties hanging over the property market at the start of the year were when the first interest rate cut would be, and the timing and the result of the General Election. We’ve now got the political certainty of a new government with a large majority, which we expect will help home-mover confidence. It’s very early days, but the new Chancellor’s immediate announcements on housebuilding targets and planning reform are positive signs that the government is keen to get going with its manifesto pledges. With many areas of the market that could be improved, we hope that the new government is able to get on with its plans and deliver sustainable housing policies that help the market in the medium to longer-term. One area of the market in need of more support is first-time buyers, many of whom have been stretched to the limit by high mortgage rates, with some also facing higher stamp duty fees when the current thresholds are set to revert in March 2025.
"A Base Rate cut is expected to lead to lower mortgage rates, which could be the gamechanger for some would-be home-movers who are being held back by significantly higher monthly mortgage costs. The average five-year fixed rate is still nearly twice as high as it was before the first of 14 consecutive Bank of England rate increases in 2021, with rates staying elevated for much longer than many thought that they would. A first Base Rate cut for over four years, together with the new political certainty, could set the scene for a positive Autumn market, with improved affordability and a more confident outlook in the second half of the year."
