The number of potential buyers enquiring to view homes for sale rose 19% annually following the reduction of the base rate, a property listing firm said.
The Rightmove House Price Index stated that this year-on-year surge in activity was against the backdrop of a subdued market in 2023, when inflation and mortgage rates were still high.
The Bank of England’s decision to reduce the base rate for the first time since 2020 still had a positive impact on buyer activity, Rightmove said, as demand for viewings was 11% up over the month of July.
Estate agents suggested that political certainty and an improved economic outlook also helped with buyer confidence.
Matt Thompson, head of sales at Chestertons, said: “Despite the summer holidays, we are currently seeing more house hunters starting or resuming their search than we did in August of last year. This increase in buyer activity is predominantly driven by lower interest rates and the availability of more attractive mortgage products, which is even tempting first-time buyers to take the first step towards homeownership.”
Tim Bannister, director of property science at Rightmove, said: “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 homemover sentiment.
“As the summer holiday season comes to an end, the conditions are there for a more active autumn market. The reaction from homemovers 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.”
Tomer Aboody, director of MT Finance, added: “Now that we’ve had the first interest rate cut in a few years, mortgages have followed suit, which has already led to more activity in the market. There has been an uptick in the number of buyers and sellers registering interest, keen to take advantage of lower mortgage rates. This, along with lower inflation numbers, has provided a positive outlook and feel-good factor for the market, bolstered by the hope of further rate reductions to come.
“However, there is a potential fly in the ointment with the new Chancellor’s October Budget on the horizon and a fear that higher taxes could result in that feel-good factor slipping away. Here’s hoping that isn’t the case and that there is some more positivity in the market for the final four months of the year.”
Base rate cut leads to improved outlook for house prices
Rightmove said the positive impact of the base rate cut and “other encouraging market data” led the company to revise its end-of-year price prediction upwards.
It now forecasts a 1% rise in new seller asking prices this year, up from a previous prediction of a 1% fall.
Rightmove said although uncertainties remained, it still expected the rest of the year to be positive.
It found that the number of agreed sales was still higher than last year and currently up 16% annually. Meanwhile, the number of new sellers coming to market was 5% ahead of the same period in 2023.
In July, the amount of available housing stock each estate agent had on their books stood at 62 properties, slightly up from 61 in June.
The number of days for each home to secure a buyer increased slightly from 61 in June to 62 in July. This was the longest time to secure a buyer so far this year, and higher than an average of 53 days in June 2023.
Asking prices see usual seasonal fall
Despite the overall optimism and improved activity, Rightmove found that average asking prices still experienced the usual seasonal decline, with a 1.5% fall to £367,785.
The firm said this tracked with the fall in new seller asking prices occurring in August for the last 18 years, and the size of the fall was in line with long-term averages.
Annually, average asking prices were 0.8% higher.
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
