The UK housing market is experiencing noticeable changes as mortgage rates decline, offering relief to home buyers and sellers alike. Key developments are reshaping the market landscape.
- A surge in housing inventory is observed, with estate agents listing more properties than seen in the past decade.
- Falling mortgage rates have made home purchases more feasible, attracting a rise in buyer inquiries and agreed sales.
- House prices are stabilizing, with only a minimal increase in average asking prices, granting buyers more negotiation leverage.
- Market optimism is expected to continue, with potential further interest rate cuts projected, enhancing affordability.
Data from Rightmove reveals a significant upsurge in available properties for sale across Britain, averaging 63 homes per estate agent branch—a 12% increase year-on-year and the highest availability since 2014. During the housing market turmoil caused by the pandemic, listings were notably scarce, plunging to below 40 properties per branch, which fueled unprecedented price hikes backed by high demand and tax incentives. Currently, the expanded housing stock empowers buyers with greater negotiating power, tempering price growth.
Falling mortgage rates are the primary driver of the newfound market activity, enticing former prospective buyers to reconsider their purchasing options. The average five-year mortgage rate has decreased to 4.6% from a peak of 6.1% reported in July 2023, boosting affordability and facilitating market re-entry for buyers postponing moves due to financial constraints. Consequently, there is a reported 29% increase in agreed sales and a 17% rise in buyer inquiries, outlining a phase of recovery following two years of stagnation induced by rapidly escalating mortgage rates. The improved conditions are echoed by housebuilders and estate agents, who are exhibiting increased confidence in a resurgent housing market.
Despite broader economic uncertainties, Rightmove data shows that annual asking prices have risen marginally by 1%, with significant gains in the mid-market segment—exemplified by a 1.7% rise in three-bedroom home prices. However, the high-end market is seeing minor declines, with prices for larger homes reducing slightly by 0.2%, as discerning buyers await policy clarification before committing to purchases. Experts, including Rightmove’s Tim Bannister, highlight that the moderate price movements reflect the competitive pricing needed to attract buyers, given ongoing affordability challenges.
Looking ahead, optimism prevails in anticipation of forthcoming fiscal and monetary policy developments. With wage growth outpacing house price inflation and anticipated reductions in interest rates, affordability is set to improve. Analysts forecast a vibrant housing market in 2025, drawing parallels to momentum last recorded in the summer of 2022, contingent on clarity post the October 30 budget and potential further interest rate adjustments.
The UK housing market shows promising signs of recovery, driven by lower mortgage rates and increased property listings.
