The Bank of England announced its decision to reduce the Base Rate to 5% at the start of August, which was the first cut in four years.
Rightmove say: 'Our real-time data means we can see shifts in property market activity as they’re happening, so we’ve been keeping a close eye on how this news has affected home-mover activity.
In July, we saw demand – that’s the number of buyers enquiring about homes for sale on Rightmove – increase by 11% compared to July 2023. But since the Base Rate cut was announced, we’ve seen demand jump even further, and it’s currently 19% higher than the same time a year ago. This significant rise shows the positive feeling the long-awaited Base Rate drop has brought about with home-movers, looking to kick start their move.
Our property expert, Tim Bannister, says: “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.”
What’s happened to mortgage rates in the last few weeks?
We’ve seen mortgage rate reductions gather pace since the beginning of August, and we saw the lowest available 5-year fixed rate mortgage deal (3.83%, for 60% LTV) available since before the mini-Budget in September 2022. However, mortgage rates remain much higher than they were just a few years ago, and it’s likely to take more cuts to the Base Rate before home-movers start to see more substantial drops.
Tim says: “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.”
What’s happened to house prices this month?
We normally see a seasonal drop in house prices at this time of year, and 2024 has been no different. Average asking prices of new properties coming onto the market are down 1.5% since last month, to £367,785 (-£5,708). You can check what’s happened to house prices in your local area in our monthly House Price Index.
We usually see house prices drop in August, with many putting their home-moving plans on hold until after the summer holidays. Sellers will often find themselves pricing their homes more attractively at this time of year, in an attempt to pique the interest of what’s often a smaller pool of buyers. Our data shows that homes that don’t receive an enquiry shortly after it’s listed for sale on Rightmove are far more likely to need to be reduced later – so an enticing asking price from the get-go can be the difference between a home finding a buyer, and being left unsold.
What could happen to house prices for the rest of 2024?
At the end of each year, we predict what might happen to house prices over the upcoming 12 months. At the end of 2023, our forecast indicated that house prices were likely to fall by 1% by the end of 2024.
But there’s been largely positive news around the direction of inflation as we’ve progressed through the year, and even though we saw a small uptick in inflation last week, up 0.2%, this rise had been largely expected. Mortgage rates have also continued to fall from the peak of July 2023, so along with the bounce in activity we’ve seen since the Base Rate cut, we’re now expecting average asking prices to remain steady as we move through the rest of the year. We now forecast that we’ll end the year with house prices 1% higher than they were at the end of 2023.
Tim says: “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.” '
