"The supply of homes for sale now stands at a 7-year high, with an average of 33 homes per agent, giving buyers more choice. This increased supply is expected to keep house price inflation under control throughout 2024 and into 2025"
- Nicky Stevenson - Fine & Country
The UK housing market is set to experience a positive shift this autumn, driven by increased supply, heightened buyer and seller activity, and renewed confidence following the recent interest rate reduction.
Nicky Stevenson, Managing Director of Fine & Country says: “Traditionally autumn brings renewed momentum to the housing market. The summer period typically sees a slowdown as many aspiring homeowners pause their search until after their holidays. As the seasons change, we usually observe an uptick in activity.”
Stevenson highlights recent HMRC data, revealing that property transactions in September have averaged 12% higher than in August over the past five years. Rightmove figures further underscore this trend, showing a seasonal decline of 1.5% in the average asking prices in August, bringing the new average to £367,785. This decrease aligns with an 18-year pattern in new seller asking prices in August, followed by a recovery as the market enters the autumn months.
Stevenson notes: “The supply of homes for sale now stands at a 7-year high, with an average of 33 homes per agent, giving buyers more choice. This increased supply is expected to keep house price inflation under control throughout 2024 and into 2025. Despite strong earnings growth, elevated mortgage rates mean that buyers remain price sensitive and modest levels of house price growth will help affordability rebalance further.”
Stevenson points to Zoopla data indicating that 20% of homes listed for sale in August had an asking price reduction of 5% or more, above average but lower than the 23% recorded last autumn when higher mortgage rates had a much more significant impact on demand. “Setting the right asking price from the start is crucial for achieving a quick sale, with homes that required an asking price cut taking over twice as long to sell than homes without,” she adds.
While the headline rate of inflation has seen a slight increase, reaching 2.2% in July, Stevenson believes the outlook remain stable.
“Inflation might drift a little higher over the next few months but is expected to remain relatively close to the 2% target this year and next,” she comments. “With reduced inflationary pressure, many economists are predicting another rate cut for the year. According to a Reuters poll, 65% of economists forecast the rate to drop in November, leaving borrowing costs at 4.75%.”
The recent interest rate cut has already positively impacted the market, with demand continuing to strengthen and mortgage approvals in July reaching their highest level in almost two years, up 26% year-on-year. Transaction levels have also steadily recovered, up 6.7% year-on-year in July. Stevenson adds that many major lenders have reduced their mortgage rates in response to the rate cut, with intermediary confidence in the mortgage industry’s outlook returning to its long-run norm.
In the prime market, the average property price is £1.23 million, with a slight year-on-year decline of 3.7%. However, Stevenson noted that the market remains buoyed by cash buyers, who accounted for 33% of sales in the year to April 2024. While this is a slight decrease from the 35% recorded in the same period in 2023, it remains significantly higher than the 28% observed in 2019.
"Overall, the UK property market is on track for a strong autumn, with increased activity, stable prices, and renewed buyer confidence," Stevenson concluded.
