UK house asking prices fall £5,708 in August, but experts predict big boost after Bank of England rate cut

UK house asking prices fell by more than £5,700 in August, but the Bank of England rate cut has sparked a big boost for sales.

Rightmove said the average new-seller asking price across the UK has fallen 1.5% this month to £367,785, a £5,708 monthly drop.

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But the property website said the drop was seasonal, and had happened for the last 18 years, as sellers put home-moving plans on hold in August to go on holiday.

This also means that new sellers who do come to market at this quieter time of year may have a pressing need to sell, Rightmove said, which means they tend to price more competitively.

Of course, Rightmove’s data is only based on asking prices and the eventual price a property is sold for may well differ.

But, summer sellers this year may find that there is a degree of buyer buzz around the market following a cut to interest rates.

The Bank of England (BoE) cut interest rates for the first time since 2020 at the beginning of August.

At the Monetary Policy Committee’s (MPC) meeting, ratesetters at the BoE reduced the base rate from 5.25% to 5%.

High street banks and lenders use the BoE base rate to influence their own interest rates on mortgages, loans and savings accounts.

As a result, estate agents have seen a 19% jump in the number of people contacting them about homes for sale compared with the same period last year.

Tim Bannister, Rightmove’s director of property science, said the rate cut “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,” he said.

Rightmove has revised its yearly house price forecast up to a 1% rise, from a previous estimate of a 1% drop over the whole of 2024.

Tim added: “As the summer holiday season comes to an end, the conditions are there for a more active autumn market.

“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, since we didn’t initially forecast anything more drastic than a slight drop in prices this year.”

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What’s happening with mortgage rates?

Interest rates had remained at a 16-year high of 5.25% for almost a year causing major affordability challenges, particularly for first-time buyers.

Following the cut, Barclays, Nationwide, Halifax and NatWest dropping their rates to below 4% in a boon for mortgage owners and prospective home buyers.

But the people most likely to benefit from these deals are those who have owned their home for a significant period of time and have a bigger deposit.

This is because they will have been able to take advantage of house prices to build up equity.

On the other hand, first-time buyers typically scrape together deposits of 15% or less.

Tanya Elmaz, director of sales at mortgage lender Together, said the rate cut has also given a “welcome” boost to the mortgage market.

She said: “We have seen the largest mortgage lenders cutting their rates and adding some competitiveness to the sector, which will provide confidence to consumers looking to purchase property or refinance now.”

The average five-year, fixed mortgage rate is now 4.80%, Rightmove said, still higher than three years ago – before the first of 14 consecutive Bank rate increases – but significantly down from 5.82% at this point in 2023.

Rightmove’s weekly mortgage tracker shows that the best available five-year fixed rate is now 3.83% for those with a 40% deposit, Rightmove added.

The figure is the lowest that a five-year fixed rate has been since the period before then-prime minister Liz Truss’s mini-budget in September 2022.

Tanya at Together said those moving ahead with their property plans should explore the range of products and schemes available. 

She added: “First time buyers can look at taking advantage of shared ownership, and for those looking for fast and flexible finance to jump on an opportunity there is the option of bridging loans.

“Speaking to a professional mortgage advisor is a great way to assess the options available.”

Different types of mortgages

We break down all you need to know about mortgages and what categories they fall into.

A fixed rate mortgage provides an interest rate that remains the same for an agreed period such as two, five or even 10 years.

Your monthly repayments would remain the same for the whole deal period.

There are a few different types of variable mortgages and, as the name suggests, the rates can change.

A tracker mortgage sets your rate a certain percentage above or below an external benchmark.

This is usually the Bank of England base rate or a bank may have its figure.

If the base rate rises, so will your mortgage but if it drops then your monthly repayments will be reduced.

A standard variable rate (SVR) is a default rate offered by banks. You usually revert to this at the end of a fixed deal term, unless you get a new one.

SVRs are generally higher than other types of mortgage, so if you’re on one then you’re likely to be paying more than you need to.

Variable rate mortgages often don’t have exit fees while a fixed rate could do.

Who tracks house prices?

There are several different house price trackers, all of which measure something slightly different.

The official measure comes from the Office for National Statistics (ONS), which examines the prices homes have actually sold for after they are registered on the Land Register.

The organisation’s latest figures showed that the average price tag for a home increased by 2.7% in the 12 months to June.

This was unchanged from May, the Office for National Statistics (ONS) said.

This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there’s a big time lag.

Some lenders and property websites also publish monthly indexes, tracking the average prices of homes on which they provide mortgages.

Nationwide said the the average house price nudged up 0.3% in July.

Across the UK, it said the average house price in July was £266,334.

Halifax, the UK’s biggest lender, said house prices rose by 0.8% in July.

That means the average property is now £2,200 more expensive than the previous month, and now stands at £291,268.

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