July property market update
The property market has seen a notable shift this July as average new seller asking prices drop by 0.4% (-£1,617) to £373,493. This larger-than-usual decrease, compared to the 20-year July average of -0.2%, indicates that sellers are making efforts to capture buyer interest amid the myriad distractions of the season, including the General Election, ongoing sporting events, and the summer holiday period.
Market activity steady despite General Election
Despite the distractions, the property market has remained strong during the General Election campaign. Sales have increased by 15% compared to the same time last year, showing that serious buyers are still moving forward with their plans. Additionally, there are 3% more new sellers compared to last year, highlighting steady market activity.
Buyer demand
Overall buyer demand is stable, but interest from first-time buyers has dropped by 2% due to affordability challenges. First-time buyers are particularly affected by changes in mortgage rates.
The current average five-year fixed mortgage rate is 4.97%, better than the peak of 6.11% in July 2023. However, it remains much higher than the 2.51% average in July 2021, before the Bank of England raised rates 14 times in a row.
Anticipation of interest rate cuts
Many in the market are focused on when the Bank of England will cut its Base Rate, which could happen as soon as August or September. This cut would likely boost home-movers by making mortgages more affordable and improving market confidence as we head into Autumn.
Tim Bannister, Rightmove’s Director of Property Science, says:
“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 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.”
Positive outlook for the autumn market
The recent General Election has brought political stability, boosting home-mover confidence. The new government’s focus on housebuilding and planning reform is promising for the housing market. This stability, along with a potential interest rate cut, sets up a strong Autumn market.
In summary, despite challenges, especially for first-time buyers, the outlook is positive. Sellers are lowering prices to attract buyers, and market activity remains strong despite seasonal and political distractions. The expected interest rate cut could further energise the market, benefiting home-movers as we approach the end of the year.
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