826, 000 £ 1, 240, 004 - 2. 9%
665 £ 36. 1b n 15, 732
ORTGAGE AP P ROVALS (JU N)
HOMEBUYER RELIEF
The greater political clarity, alongside the Bank of England interest rate cut, should give a boost to housing market confidence. Leading indicators for activity are strong, and prices are recovering.
LONG-AWAITED CUT
The Bank of England has reduced interest rates for the first time since 2020, indicating the Bank’s confidence that inflationary pressures are slowly being brought under control. The Monetary Policy Committee voted 5 to 4 in favour of the cut, with the Governor emphasizing a cautious approach. Commentators now predict one or possibly two more rate cuts before the end of 2024. This is excellent news for homebuyers and those refinancing residential mortgages, as borrowing costs are becoming more affordable.
In anticipation of the interest rate cut mortgage rates had already begun to fall but there is hope that further cuts will follow. Nationwide have reintroduced sub 4% fixed rate mortgages, cutting rates by up to 0.25% across two-, three-, and five-year fixed rate products, whilst Barclays and TSB are the latest to cut their rates.
ACTIVITY
Whilst transaction levels remain subdued; leading indicators for activity are stronger, with momentum being sustained, despite the general election. Mortgage approvals remained broadly stable at 60,000 in June, almost back to their longterm trend (Bank of England). Affordability metrics are encouraging too, underpinned by improvements in mortgage rates and continued strong earnings growth (ONS). With growing market confidence, sales volume expectations for the next three months have reached their most upbeat level since January 2022 (RICS). The number of sales being agreed is 16% higher than a year ago (Zoopla), whilst the number of new sellers coming to market is a steady 3% above last year (Rightmove).
PRICES RISE
The average price reached £266,334 in July, up 2.1% year-on-year, the highest rate of annual growth in 19 months (Nationwide). In another signal of an improving market, buyers are currently paying 96.8% of the asking price, up from 95.4% last November (Zoopla). As sales activity picks up, the average time to sell dropped for a fifth consecutive month in a row, to 59 days in June (Rightmove) and house prices are now on track for a 2% increase by the end of the year (Zoopla).
PRIME
The government announced plans to impose VAT on private school fees to fund improvements in public education. In a poll of agents, 24% report noticing an increase in demand for homes close to outstanding rated schools, directly associated with the announcement (Dataloft by PriceHubble poll of subscribers).
The average price of a property in the prime market is £1.24 million slightly down by -2.9% year-on-year. Prime prices in Scotland and the East Midlands are showing positive annual growth, at 9.3% and 0.4% respectively.
HOME BUILDING TARGETS
Just 114,000 new homes were built in the first half of 2024 in England and Wales, 11% fewer than the same period of 2022 (DLUHC). The NHBC has suggested that the rate of new home delivery will need to more than double if we are to deliver 1.5 million homes over the next five years. The government has made clear its commitment to getting new homes built to address the housing crisis, with much hope hanging on the Planning and Infrastructure Bill to create a more efficient and better-funded planning process.
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£826,000
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