U.K. Rate Cut Invigorates Property Market
Number of potential buyers contacting estate agents about homes for sale during August rose 19%
U.K. property demand rose after the Bank of England’s rate cut in August, while the average price of property coming to the market fell from July’s average price, according to data from Rightmove.
The U.K. property website said the bank’s first-rate cut in four years spurred an uptick in market activity, with a 19% increase in the number of potential buyers contacting estate agents about homes for sale during August compared with the same month a year ago.
“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,” Rightmove said.
In July, the increase was 11% on the same month last year.
Meanwhile, the average asking price for new sellers fell 1.5%, or 5,708 pounds ($7,337) to 367,785 pounds, matching the long-term average as prices have declined from July to August for the past 18 years.
“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,” Rightmove’s director of property science, Tim Bannister, said.
Rightmove expects a further increase in activity during the Fall following the rate cut, and, as such, raised its full-year forecast to a 1% rise in new seller asking prices, from a previously forecast 1% fall.
However, although buyers and sellers are more optimistic about the outlook of the market, mortgage rates are still very high compared with a few years ago, stretching affordability.
A few more cuts to the central bank rate will likely be necessary to see a more substantial reduction in mortgage rates, Bannister said.