The recent Bank of England rate cut has had a significant impact on the UK property market, sparking a surge in buyer interest and driving up house prices. This rate cut, the first in four years, has led to a flurry of activity in the housing market, with potential buyers contacting estate agents at a much higher rate compared to previous years.
According to figures from the property website Rightmove, the number of potential buyers contacting estate agents about homes for sale has increased by 19% since the rate cut on 1 August. This surge in interest follows a period of economic uncertainty and rising borrowing costs, which had put pressure on households.
The Bank of England’s decision to lower interest rates from 5.25% to 5% has made mortgages more affordable for buyers, leading to an increase in buyer demand. This, in turn, has contributed to a rise in house prices, with Rightmove upgrading its house price forecasts from a 1% drop to a 1% rise in new seller asking prices for the year.
Financial markets are anticipating further rate cuts by the Bank of England in response to fading inflationary pressures. It is expected that rates could potentially drop to as low as 3.5% by the end of next year. This outlook has created a sense of optimism in the property market, with expectations of a buoyant autumn market.
The average new seller asking price has seen a slight decrease this month, in line with the typical seasonal trend. However, as the summer holiday season comes to an end, conditions are ripe for a more active autumn market. The reaction from home-movers to the rate cut, combined with other positive economic trends, has led to an increase in price predictions for the year.
Despite the positive impact of the rate cut on the property market, borrowing costs are still higher than they were three years ago, and housing affordability remains a concern for many families. While the rate cut has boosted buyer interest, uncertainties surrounding the budget and the expiration of favorable mortgage deals may temper price growth in the coming months.
Overall, the Bank of England rate cut has injected new life into the UK property market, with increased buyer engagement and a more optimistic outlook for the future. As the market continues to adjust to the changing economic landscape, it will be interesting to see how these developments shape the housing market in the months to come.