The UK housing market is witnessing a significant shift as falling mortgage rates attract more buyers, stabilizing house prices.
- Rightmove data indicates a remarkable 12% increase in housing listings compared to last year, significantly easing the prior shortage.
- The average asking price for homes rose marginally by 0.3% in October, contrasting with typical seasonal trends.
- A drop in the average five-year fixed mortgage rate to 4.6% has contributed to the recovery and increased inquiries from buyers.
- Prospective market developments hint at an active future, with potential further interest rate reductions and improved affordability.
The UK housing market is undergoing a notable shift, driven by a decrease in mortgage rates that is enticing more buyers and aiding in the stabilization of house prices. Data from Rightmove reveals that estate agents across Britain are now marketing an average of 63 homes – a 12% increase from last year and the highest level seen since 2014. This uptick in available housing is providing buyers with more negotiating power and is curbing the rapid price growth experienced during the pandemic when housing stock was scarce.
In October, the average asking price on Rightmove for new listings increased slightly by 0.3% to £371,958, a figure substantially below the usual 1.3% rise observed during autumn when buyers typically re-enter the market post school holidays. Tim Bannister, head of property data at Rightmove, remarked that this modest price growth occurs as buyer choice expands to levels not seen in nearly a decade. He emphasized that with buyers having a broad selection to choose from, sellers are now required to price their properties competitively to secure deals amid ongoing affordability challenges.
The driving force behind the increase in homes for sale is largely attributed to the reduced mortgage rates, which are encouraging potential buyers, including those needing to sell their current homes, to re-engage with the market. The average five-year fixed mortgage rate has dipped to 4.6%, down from its peak of 6.1% in July 2023. This reduction has made moving more affordable, reflected in a 29% rise in agreed sales compared to last year, and a 17% upswing in inquiries from prospective buyers. This shift is considered a recovery from two years of stagnation, where escalating mortgage rates had compelled many to pause their moving plans.
Housebuilders are also reporting an uptick in sales, and estate agents are optimistic about the housing market’s trajectory. Rightmove data shows that asking prices have risen by 1% over the past year, with mid-market properties, such as three-bedroom homes, experiencing the most significant gains at 1.7% year-on-year. However, larger properties, including five-bedroom houses and four-bedroom detached homes, have seen a slight decline in prices by 0.2%. Bannister noted that some top-tier market buyers are holding back on transactions until fiscal policy becomes clearer.
Despite uncertainties within the current market landscape, there is optimism about the future. Predictions for 2025 are hopeful, with expectations of further interest rate cuts and wage growth outpacing house price inflation, thus enhancing affordability for potential buyers. Bannister anticipates that more clarity post the upcoming 30 October budget could rejuvenate market optimism, akin to the uplift observed in the summer of 2022.
The UK housing market shows signs of recovery, driven by lower mortgage rates and increased buyer activity, potentially setting the stage for an active 2025.
