Potential Base Rate cut bodes well for Autumn housing market

It's been a busy summer so far, with annual getaways underway, the General Election campaign and the Euro football tournament all taking place over the past two months.

Despite concern among some that the General Election campaign would lead to a significant slowdown in home-moving activity, our data shows that most people have been getting on with their moves since the election was called.

In fact, average asking prices have remained stable overall and are still 0.4% higher than a year ago, despite a monthly dip. The average asking price of a home in Great Britain dropped by -£1,617 (-0.4%) to £373,493.

However, this is still a slightly bigger drop than the 20-year July average of -0.2%, as home-sellers try to capture the attention of buyers with a more tempting price heading into the summer holidays and the Paris Olympics.

The number of sales being agreed is 15% above the same period a year ago, when we were approaching the peak of mortgage rates. This compares to last month's figure which was +6% above last year. Also, the number of new sellers coming to market in the last four weeks is a steady 3% above last year.

Month	Avg. asking price	Monthly change	Annual change
July 2024	£373,493	-0.4%	+0.4%
June 2024	£375,110	+0.0%	+0.6%

You can read more about what's happening in your local area in our monthly House Price Index.

Political certainty brings a boost for home-movers

The political certainty of having the next government in place is also likely to boost home-mover confidence heading into the second half of the year.

Our property expert Tim Bannister says: "Three major uncertainties hanging over the property market at the start of the year were when the first interest rate cut would be, and the timing - and the result of the General Election.

"We've now got the political certainty of a new government with a large majority, which we expect will help home-mover confidence. It's very early days, but the new Chancellor's immediate announcements on housebuilding targets and planning reform are positive signs that the government is keen to get going with its manifesto pledges. With many areas of the market that could be improved, we hope that the new government is able to get on with its plans and deliver sustainable housing policies that help the market in the medium to longer-term."

Read more:What a Labour government could mean for the housing market

Anticipated first Base Rate cut expected in Autumn

A key concern for many home-movers is when the first Bank of England Base Rate cut will be, with high mortgage rates continuing. There are signs that some people are waiting for this before putting their moving plans into action.

Overall buyer demand, which is measured by the number of would-be buyers contacting estate agents about homes for sale, has remained stable in the last four weeks when compared with this time last year. However, there's a slight drop (-2%) in buyer demand in the first-time buyer sector, many of whom have been stretched to the limit by high mortgage rates, with some also facing higher stamp duty fees when the current thresholds are set to revert in March 2025.

Some good news for home-movers is that the financial markets expect that the first Base Rate cut will be in August or September, which would be a boost for home-movers and the housing market leading into Autumn.

Tim says: "A Base Rate cut is expected to lead to lower mortgage rates, which could be the gamechanger for those who are being held back by significantly higher monthly mortgage costs. The average five-year fixed rate is still nearly twice as high as it was before the first of 14 consecutive Bank of England rate increases in 2021, with rates staying elevated for much longer than many thought that they would."

Our weekly mortgage tracker shows that the average five-year fixed rate is now 4.97%, which while improved from the peak of 6.11% in July 2023, is still much higher than the average of 2.51% in July 2021, before the first of 14 consecutive Base Rate increases.

You can check current mortgage rates here.

"A first Base Rate cut for over four years, together with the new political certainty, could set the scene for a positive Autumn market, with improved affordability and a more confident outlook in the second half of the year," Tim adds.

The header image for this article was provided courtesy of Stags, Taunton.

READ MORE: The 10 quickest markets for home-sellers

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