821, 000 £ 1, 229, 126 - 3. 7%
660 £ 36. 4b n 15, 709
ORTGAGE AP P ROVALS (JU L)
AUTUMN MOMENTUM
The beginning of autumn is set for a positive market shift, with increased supply, heightened buyer and seller activity, and improved confidence following the recent interest rate drop.
SEASONAL PATTERNS
The summer period typically sees a slowdown in the housing market as many aspiring homeowners pause their search until after their holidays, often leading to a pick-up in activity in autumn. Between 2019 and 2023 there were 12% more transactions in September compared to August (Dataloft (PriceHubble), HMRC). Average asking prices experienced a seasonal decline of 1.5% in August, bringing the new average to £367,785 (Rightmove). Historically, August has seen a decrease in new seller asking prices for the past 18 years, and this month’s reduction aligns with the typical pattern. However, other transaction-based indices show an overall trend of slowly but steadily growing house prices.
MORE CHOICE
The supply of homes for sale now stands at a 7-year high with an average of 33 homes per agent, increasing buyer choice (Zoopla). Increased supply will help 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. 1 in 5 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 (Zoopla). 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 (Zoopla).
INFLATION AND INTEREST RATES
CPI, the headline rate of inflation, reached 2.2% in July 2024, a slight increase on the month before (ONS), however looking
forwards, whilst inflation might drift a little higher still over the next few months is forecast to remain relatively close to the 2% target this year and next. The majority of economists in the Reuters poll (65%) forecast the Bank of England to cut rates just once more this year, in November, leaving borrowing costs at 4.75%. Demand continues to strengthen, with mortgage approvals in July reaching their highest level in almost two years, up 26% year-on-year (Bank of England). Transaction levels continue to steadily recover, up 6.7% yearon-year in July (HMRC).
Many major lenders have reduced their mortgage rates in the weeks following the interest rate cut. Intermediary confidence in the outlook for overall mortgage business volumes has now returned to its long-run norm. 29% of advisers described themselves as ‘very confident’ and 65% ‘fairly confident’ in Q2 2024 about the industry’s future of the mortgage industry, compared with 24% and 62% in the previous quarter (Intermediary Mortgage Lenders Association).
PRIME
In the prime market, the average price of a property is £1.23 million, having moderated slightly by -3.7% year-on-year.
The proportion of cash buyers has held up, with 33% of sales in the year to April 2024 being made with cash (UK HPI). While this is a slight decrease from the 35% recorded in the same period in 2023 when borrowing costs surged, it is notably higher than the 28% observed in 2019.
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