"Despite the post-budget gloom, the market is more positive than last year, with average asking prices currently 1.2% higher than in 2023, in line with our forecast of a 1% increase for 2024"
- Tim Bannister - Rightmove
The average price of property coming to the market for sale has fallen by 1.4% this month (or £5,366) to £366,592. This is the second month in a row that new seller pricing has fallen more than the norm, with the usual drop seen at this time of year being 0.8%.
Last month’s pre-Budget jitters have turned into post-Budget disappointment, creating new challenges for the housing market, and appear to have caused a larger-than-normal seasonal slowdown in pricing as we head towards Christmas. However, as the property portal point out, despite the dampener of the Budget, the big picture of market activity remains strong when compared with last year.
Since the Budget there has also been a second Bank Rate cut, with Rightmove’s real-time data identifying early signs of a subsequent boost in buyer activity. Sustained strong market metrics compared with last year and optimism for lower mortgage rates in 2025 have led to Rightmove forecasting a 4% increase in average new seller asking prices next year. Despite this prediction, the market is expected to remain price-sensitive, and sellers are currently competing with a decade-high number of other sellers to attract a buyer.
While more mortgage rate cuts are still expected during 2025, Bank Rate cuts are now forecast to be slower-paced, which could delay the affordability improvements that some movers have been holding out for.
Tim Bannister of Rightmove comments: "There’s been a lot of news to digest for home movers over the last few weeks and it appears that the market may still be chewing it over. We had been seeing a drop-off in buyer demand, both in the lead-up to the Budget and in its immediate aftermath, as it was confirmed that there will be an increase to stamp-duty charges for most home-movers and second-home buyers, and some first-time buyers.
"However, a second Bank Rate cut and a boost of optimism regarding 2025 appears to have reversed this trend at least temporarily. Zooming out of these short-term trends, the big picture of market activity remains positive when compared to the quieter market at this time last year. This sets us up for what we predict will be a stronger 2025 in both prices and number of homes sold, particularly if mortgage rates fall by enough to improve affordability for more of the mass market significantly."
The number of sales being agreed continues to track positively against the quieter market of this time last year and is now 26% ahead of the same period in 2023. Meanwhile, the number of new sellers coming to market is 6% ahead of the same period a year ago. Rightmove’s real-time data can identify the immediate impact of external events on home-moving activity.
The latest snapshot shows that a drop in the number of buyers contacting estate agents about homes for sale after the Autumn Budget has now been replaced by an uptick in buyer demand in response to the second Bank Rate cut. To put these trends into figures, in early October, before the Budget, buyer demand was 23% ahead of the same period in 2023. This figure dropped to +18% following the Budget but has now ticked back up to +23% following the Bank Rate cut.
However, we do still expect the usual seasonal slow-down in home-moving activity as we get closer to Christmas.
A combination of sustained positive market activity and the expectation that mortgage rates will lower over the course of next year has led to Rightmove’s 2025 forecast of a 4% increase in average new seller asking prices.
This is Rightmove’s highest prediction for increases in prices since 2021, with improving buyer affordability and the release of some pent-up demand expected to put modest upward pressure on prices next year. We also expect a surge in the number of completed sales in March next year to beat the Stamp Duty deadline at the end of that month.
However, there is still caution for sellers as we approach 2025, with the market expected to remain price-sensitive. Seller competition to find a buyer is intense, with the average number of homes for sale per estate agent branch at its highest level for the time of year since 2014.
New sellers will need to continue being sensible with their price expectations to attract buyers who are spoilt for choice, and still affordability- stretched, especially with a slow-down expected in the rate of wage growth, following the National Insurance increases in the budget.
Tim Bannister concludes: "Despite the post-budget gloom, the market is more positive than last year, with average asking prices currently 1.2% higher than in 2023, in line with our forecast of a 1% increase for 2024. We now predict that we’ll see a stronger year for prices in 2025.
"The signs are that the market momentum that we’ve been seeing this year will continue into next year, especially if mortgage rates drop to a level that gives greater affordability to some movers who have been waiting in the wings until now.
"However, we still expect some twists and turns next year. The speed at which mortgage rates come down next year will be key in determining activity levels for some of the market’s traditionally busiest periods, and sellers will still need to price temptingly enough to secure a buyer while the choice of homes for sale remains as high as it is right now."
