FORECASTING A PROMISING AUTUMN: FACTORS DRIVING OPTIMISM IN HOUSING MARKET

Monday July 15, 2024

Optimistic Outlook for Autumn Housing Market Amidst Summer Activities

As summer unfolds with vacations, a recent General Election, and the Euro football tournament, the housing market has demonstrated remarkable resilience and activity. Despite initial concerns that the election might slow down home-moving processes, recent data paints a different picture.

Stable Asking Prices and Active Market Engagement

Average asking prices have remained relatively stable, showing a minor year-on-year increase of 0.4%, although there was a slight monthly decline. This adjustment in pricing reflects sellers’ strategies to attract buyers amidst the summer holidays and in anticipation of events such as the Paris Olympics.

Moreover, there has been a notable 15% rise in the number of property sales agreed upon compared to the same period last year, surpassing last month’s 6% increase. Additionally, the influx of new sellers entering the market has remained steady, showing a 3% rise from last year. This suggests robust market activity despite ongoing fluctuations in mortgage rates.

Political Certainty Boosts Market Confidence

The recent political certainty, following the formation of a new government with a significant majority, is expected to bolster confidence among home-movers as we head into the second half of the year. Analysts and experts point out that uncertainties surrounding the timing of interest rate adjustments and election outcomes have now been resolved.

The government’s swift actions towards meeting housing targets and reforming planning regulations are seen as positive steps towards fulfilling electoral promises and stimulating the housing sector.

Anticipation of Base Rate Cut

Looking forward, one of the key concerns for potential buyers is the timing of the first Bank of England Base Rate cut, which could alleviate high mortgage rates and potentially stimulate market activity. Market indicators suggest that many prospective buyers are holding off on their plans until such a cut occurs.

Despite the stability in overall buyer demand, there has been a slight 2% dip in the first-time buyer sector, largely due to stretched finances exacerbated by high mortgage rates and the looming return to higher stamp duty thresholds in March 2025.

Expectations and Market Response

Financial markets are abuzz with anticipation that the first Base Rate cut in over four years could come as early as August or September. This adjustment is expected to bring down mortgage rates, offering relief to buyers burdened by elevated monthly payments. While current five-year fixed rates have improved from their peak in July 2023, they still remain significantly higher than the pre-2021 average, which was around 2.51%.

Setting the Stage for a Positive Autumn Market

In conclusion, with solid sales figures, newfound political stability, and the prospect of reduced mortgage rates on the horizon, the housing market appears poised for a progressive and optimistic trajectory in the coming months. These developments set the stage for an active and potentially fruitful Autumn market, marked by improved affordability and heightened buyer confidence.