In August, UK house prices experienced a decline consistent with the long-term average, as holiday plans caused some potential buyers to delay their moves. Concurrently, the Bank of England's interest rate reduction spurred buyer demand, according to data released by the property website Rightmove on Monday.
The report indicated a seasonal price drop of 1.5 percent in August following a 0.4 percent decrease in July. Historically, asking prices have fallen in August annually for the past 18 years, matching this long-term average decline.
Year-over-year, house price growth doubled to 0.8 percent from 0.4 percent the previous month.
The first interest rate cut since 2020 has invigorated buyer activity, prompting Rightmove to revise its 2024 house price forecast upward. They now anticipate a 1.0 percent increase over the year, compared to the previously projected 1 percent decrease.
Earlier this month, the Bank of England, citing weaker economic growth and declining inflation, reduced its benchmark rate by a quarter-point to 5.00 percent from 5.25 percent—the highest rate since early 2008.
"Although mortgage rates haven't significantly decreased yet since the rate cut, the arrival of the long-awaited first cut and the downward trend in mortgage rates is bolstering home-mover confidence," said Tim Bannister, Rightmove's Director of Property Science. He noted that as the summer holiday season concludes, conditions are set for a more active autumn market.
Data showed that since the interest rate cut on August 1, the number of potential buyers contacting estate agents for home viewings increased by 19 percent compared to the same period last year.
Rightmove predicts modest price increases in autumn, followed by typical seasonal monthly declines towards the end of the year. Bannister pointed out that October’s budget, the timing of a second rate cut, and the state of the US economy are variables that could influence future price movements.
The number of sales agreed upon between buyers and sellers continued to show strong performance, with a 16 percent increase over last year. Additionally, the number of new sellers entering the market remained stable, up 5 percent from the same period last year.
However, Bannister advised, "Buyers are still under financial strain, so sellers should not become overly optimistic due to the higher buyer activity levels compared to last year, and should continue to offer competitive prices."
