UK house prices declined in August in line with the long-term average as some buyers put their home-moving plans on hold to enjoy holidays, while the Bank of England’s interest rate reduction lifted buyer demand, data published by the property website Rightmove showed Monday.
House prices posted a seasonal drop of 1.5 percent in August after a 0.4 percent drop in July. Asking prices have fallen in the month of August over the last 18 years, and the size of drop matched the long-term average.
On a yearly basis, the growth in house prices doubled to 0.8 percent from 0.4 percent in the previous month.
The first interest rate cut since 2020 has boosted buyer activity, which has led Rightmove to upgrade its 2024 house price forecast. House prices are expected to climb 1.0 percent over the whole of 2024 compared to a drop of 1 percent projected previously.
Early this month, citing weaker economic growth momentum and receding inflation, the BoE has reduced its benchmark rate by a quarter point to 5.00 percent from 5.25 percent, which was the highest since early 2008.
“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.
Conditions are for a more active autumn market as the summer holiday season comes to an end, Bannister noted.
Data showed that the since the interest rate cut on August 1, the number of potential buyers contacting estate agents to view homes for sales rose by 19 percent than in the same period of last year.
Rightmove expects a small price rises in the autumn, followed by the usual seasonal monthly falls in prices at the end of the year. October’s budget, the timing of a second bank rate cut, and the US economy are some of the uncertainties that impact the price movements, Bannister said.
The number of sales being agreed between buyers and sellers continued to track very positively at 16 percent ahead of last year, and the number of new sellers coming to market was stable 5 percent ahead of this time last year.
However, Bannister said, “Buyers are still stretched, and so sellers mustn’t get too carried away by the higher buyer activity levels compared with last year, and continue to come to market with a competitive price.”
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