BoE rate cut helps boost UK housing market but concerns remain, Rightmove says
2024.09.15 20:17
By Suban Abdulla
LONDON (Reuters) – Britain’s housing market recovered momentum in September, as the Bank of England’s first interest rate cut in more than three years and greater political certainty after July 4’s election boosted activity, property website Rightmove (OTC:) said on Monday.
Rightmove said average asking prices for homes increased by 0.8% after a sharp 1.5% drop in August. September’s rise was double the average for the time of year in the series and the biggest for the month since 2016.
Compared with a year earlier, asking prices were 1.2% higher at 370,759 pounds ($487,140).
Tim Bannister, Rightmove’s director of property science, said the housing market was invigorated by a new government and the first rate cut from the BoE since 2020.
But Rightmove said there were “still uncertainties ahead, including the timing of a second Bank Rate cut, and which segments of the market could be affected by announcements in October’s Autumn Statement.”
The BoE is expected to hold interest rate at 5% on Sept. 19 – although markets last week saw a 30% chance of an early cut – and cooling wage growth is likely to keep the central bank on track to cut at least once more by the end of the year.
Prime Minister Keir Starmer’s Labour government has promised to reform Britain’s planning system and has set mandatory targets to speed up housebuilding, but the shortage of home supply is likely to remain a factor driving prices for the medium term.
Britain’s finance minister Rachel Reeves is set to deliver her first annual budget on Oct. 30.
Rightmove’s monthly survey also showed the number of sales agreed between buyers and sellers rose 27% from a year ago as buyer demand improved on the back of lower borrowing costs.
The average five-year fixed mortgage rate last week was 4.67%, Rightmove said, down from 6.11% in July 2023.
Other measures of Britain’s housing sector have also shown improvement in sentiment after a recent fall in interest rates.
A closely-watched Royal Institution of Chartered Surveyors report last week showed a sharp jump in sales expectations in the coming months.
($1 = 0.7611 pounds)
