Bank Rate cut spurs further upturn in market activity
‘For anyone, looking at making a move in 2025, they should start the ball rolling now and get their plans in place whilst the market has momentum on its side.’
According to Rightmove’s House Prince Index for August 2024:
Average new seller asking prices see a seasonal drop of 1.5% (-£5,708) this month to £367,785. August has seen a monthly decline in prices from July for the last 18 years, with this month’s fall in line with the long-term average
The first Bank of England rate cut for four years has led to an immediate upturn in buyer activity:
The number of potential buyers contacting estate agents about homes for sale has jumped from 11% up on the prior year across the month of July, to 19% up since the 1st of August compared to the same time a year ago
Rightmove raises its 2024 forecast from -1% to +1% due to positive market data and trends compared to the much more subdued 2023:
The number of sales being agreed is now 16% ahead of the near-peak-mortgage-rate period of a year ago
The number of new sellers coming to market is 5% ahead of last year as confidence to move grows
Rightmove’s weekly mortgage tracker shows that the average 5-year fixed mortgage rate is now 4.80%, an improvement from 5.82% a year ago:
The best available 5-year fixed rate is now 3.83% for those with a 40% deposit, the lowest a 5-year fixed rate has been since the period before the mini-Budget in September 2022
The average price of property coming to the market for sale sees a seasonal drop of 1.5% this month (-£5,708) to £367,785.
New seller asking prices have fallen in the month of August for the past 18 years, and the size of this month’s drop is in line with the long-term average.
The distractions of school summer holidays traditionally bring a dip in prices, as some buyers put their home-moving plans on hold to enjoy holidays or time with family. This also means that new sellers who do come to market at this quieter time of year may have a pressing need to sell, which means they tend to price more competitively.
However, summer sellers this year may find that there is a degree of buyer buzz around the market that was missing in the peak-mortgage-rate market at this time last year.
As anticipated in Rightmove’s July report, the first Bank of England rate cut for four years at the start of the month has helped to accelerate mortgage rate drops and contributed significantly to improved buyer demand.
These better conditions are helping to set up a positive Autumn market, and a further spur to activity following the Bank Rate cut has led Rightmove to raise its 2024 forecast from a 1% drop over the whole of 2024 to a 1% rise in new seller asking prices.
“The first Bank Rate cut since 2020 has sparked a welcome late summer boost in buyer activity. While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment. As the summer holiday season comes to an end, the conditions are there for a more active autumn market. The reaction from home-movers to what is hopefully only the first of several rate cuts over the next year or two, combined with other positive data and trends, has led us to raise our price prediction for the year. We now expect new seller prices to rise marginally by 1% over the whole of 2024. This is a relatively small revision from our original prediction of a 1% fall in prices over the year, since we didn’t initially forecast anything more drastic than a slight drop in prices this year.”
Tim Bannister Rightmove’s Director of Property Science
"Since the Bank Rate cut on the 1st of August, the number of potential buyers contacting estate agents to view homes for sale is 19% higher than in the same period a year ago. This comparison is with a very subdued period in 2023, when the market was dealing with the fallout of unexpectedly high inflation figures and peak mortgage interest rates. However, this improvement in the buyer demand trend from +11% across the month of July shows the immediate and strong impact of the first Bank Rate cut since 2020. Agents report that increased political certainty and the improving economic outlook is also helping with buyer interest."
The positive impact of the Bank Rate cut, combined with other encouraging market data, has led Rightmove to revise its end-of-year price prediction upwards — from a 1% drop in new seller asking prices over the whole of 2024, to a 1% rise over the year. We expect small price rises in the autumn, followed by the usual seasonal monthly falls in prices at the end of the year.
Though there are still some uncertainties ahead – October’s Budget, the timing of a second Bank Rate cut, and the US economy to name just three – the scene is now set for a positive remainder of the year. The number of sales being agreed between buyers and sellers continues to track very positively at 16% ahead of last year, and the number of new sellers coming to market is now a stable 5% ahead of this time last year.
Mortgage rates continue to head downwards and have picked up some pace in recent weeks. The average five-year fixed mortgage rate is now 4.80%, which though still high compared with three years ago, before the first of 14 consecutive Bank Rate increases, is an improvement from 5.82% at this time in 2023. Rightmove’s weekly mortgage tracker shows that the best available 5-year fixed rate is now 3.83% for those with a 40% deposit, the lowest that a 5-year fixed rate has been since the period before the mini-Budget in September 2022.
Tim Bannister Rightmove’s Director of Property Science
“Although it will likely take a few more cuts to the Bank Rate for home-movers to see a more substantial reduction in mortgage rates, it’s home-mover sentiment that has immediately been heightened. Buyers and sellers are more optimistic about the outlook for the market, evidenced by the immediate upturn that we’ve seen in activity. However, though optimism around the direction of mortgage rates is justified, the reality is that they are still very high compared with a few years ago, and there will be some who need rates to drop further before their affordability is notably improved. Buyers are still stretched, and so sellers mustn’t get too carried away by the higher buyer activity levels compared with last year, and continue to come to market with a competitive price.”
Nick Harris Quarters Co-founder & Director
“There is definitely more choice in the Wokingham market for potential buyers compared to the Covid years and this combined with lower interest rates compared to a year ago, has brought more sellers to the market and in turn, and a higher number of sales being agreed.”
The number of sales was 27.45% up on August last year.
However, we must not get too carried away as the market was still struggling with the hangover from the mini-budget and the peak of mortgage rates in August 2023, so it is not just the impact of the election and bank rate cut that has caused this market activity.
The number of sales agreed is up 6.56% on the six-year average, and with renewed confidence in the market and better conditions, we should see the figures continue to rebound to more normal pre-pandemic levels.
The average £ per sq ft for properties entering the market and for those that had sales agreed are almost identical to August last year, so we must remember that pricing correctly is still paramount to finding a buyer as stretches on affordability continue to constrain purchasing power and to not get overly excited with asking prices in the light of more sales being agreed.
Price reductions have been a big issue in the market with July seeing the highest number of price reductions on record tracking back to January 2019.
Zoopla have highlighted that 20% of properties are reducing their asking price by 5% or more and these properties are taking 2.6 times longer to sell versus properties that price correctly from the start of marketing.
It takes 28 days to sell a home with no asking price reduction, but 73 days if overpriced.
Further research has found that properties that reduce their asking price, do so on average 1.83 times and total 11.35% off the original asking price throughout the marketing.
These properties end up achieving 95.61% of their final asking price and this means a total discount of 15.64% on the final achieved price compared to the original asking price.
Whilst a high number of price reductions is an issue it also highlights there are much more committed sellers on the market right now compared to previous years and perhaps becoming more realistic with their pricing expectations now they can see more positivity returning to the market.
“All in all, the market is definitely moving in the right direction for those serious movers who are realistic with their expectations and for those that are too ambitious at the start of their marketing will get left behind.”
Sellers must also consider the length of time it is taking to move home; a seller coming to the market in September should not expect to actually move until March 2025 based on it taking 60 days to find a buyer and a further 154 days to go through the legal process according to Rightmove.
“For anyone, looking at making a move in 2025, they should start the ball rolling now and get their plans in place whilst the market has momentum on its side.”
For further insights into the Wokingham property market contact Nick or Teresa at Quarters Residential Estate Agents - we're always keen to help :)
