The average asking price for new sellers has dropped by 0.4% this month, equivalent to £1,617, bringing the average price to £373,493.
This decline is larger than the typical July decrease as new sellers aim to capture buyer attention amid the distractions of the General Election, summer holidays, and major sporting events.
Market activity has remained steady throughout the General Election campaign, with signs that some potential movers are waiting for the first Bank of England base rate cut. However, most are continuing with their moving plans.
The number of sales being agreed is 15% above the same period last year, when mortgage rates were nearing their peak. Additionally, the number of new sellers entering the market is 3% higher than last year.
Despite stable overall buyer demand, there is a slight decrease of 2% in the affordability-stretched first-time buyer sector.
Current market expectations suggest that the first Bank of England base rate cut may occur as soon as August or September, which would be beneficial for most home-movers and could boost the autumn market.
The average 5-year fixed rate is now 4.97%, down from a peak of 6.11% in July 2023, but still significantly higher than the 2.51% average in July 2021, before the series of rate increases.
Tim Bannister, Rightmove’s director of property science, said: “Three major uncertainties hanging over the property market at the start of the year were when the first interest rate cut would be, and the timing and the result of the General Election.
“We’ve now got the political certainty of a new Government with a large majority, which we expect will help home-mover confidence. It’s very early days, but the new chancellor’s immediate announcements on housebuilding targets and planning reform are positive signs that the government is keen to get going with its manifesto pledges.
“With many areas of the market that could be improved, we hope that the new Government is able to get on with its plans and deliver sustainable housing policies that help the market in the medium to longer term. “One area of the market in need of more support is first-time buyers, many of whom have been stretched to the limit by high mortgage rates, with some also facing higher stamp duty fees when the current thresholds are set to revert in March 2025.”
Bannister added: “A base rate cut is expected to lead to lower mortgage rates, which could be the gamechanger for some would-be home-movers who are being held back by significantly higher monthly mortgage costs.
“The average 5-year fixed rate is still nearly twice as high as it was before the first of 14 consecutive Bank of England rate increases in 2021, with rates staying elevated for much longer than many thought that they would.
“A first base rate cut for over four years, together with the new political certainty, could set the scene for a positive autumn market, with improved affordability and a more confident outlook in the second half of the year.”
Despite concerns that the General Election campaign would slow home-moving activity, data from Rightmove indicates that the vast majority of people have continued with their plans since the election was called. T
Rightmove added that the political certainty of a new Government is likely to bolster home-mover confidence heading into the second half of the year. What remains a pressing concern for home-buyers is the timing of the first interest rate cut, with persistently high mortgage rates continuing to test affordability.
Reaction
Nathan Emerson, CEO of Propertymark:
“Any slight dip in house prices is likely to only be a temporary phase following a period of uncertainty triggered by the recent General Election.
“Once we start to hear more news from the new UK Government about how they intend to build 1.5 million new homes before the end of this parliament, alongside their other priorities for housing, this should give consumers the certainty they need to determine if they will relocate or not.
“Should inflation also continue to drop, the Bank of England may feel confident to start cutting interest rates to provide the housing market with a much-deserved summertime boost.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Most of our buyers and sellers regarded the election as an unwelcome diversion which only added uncertainty and delays.
“The contrast between the ‘why?’ and the ‘why not?’ approach to moving since 4 July has been quite marked in our offices.
“This survey has proved to be a reliable identifier of market health and confirms what we’ve seen too since the number of listings began to increase a few months ago – competitively-priced properties are attracting most attention.
“Of course, asking prices are not values but aspirational starting points which determine whether genuine buyers are attracted.”
Tomer Aboody, director of specialist lender MT Finance:
“With the election now done and dusted, the market can focus going forward. “A steady flow of transactions, despite interest rates still not coming down, is helping the market keep momentum but some help will be needed going forward.
“Potentially, this could take the form of stamp duty amendments, especially aimed at helping first-time buyers and families buy their next home. Will we see a Labour Government implement these, only time will tell, but an extra push would definitely be welcome.”
Guy Gittins, CEO of Foxtons:
“As expected, the housing market has stood firm despite the political uncertainty of a looming general election, even though a marginal reduction in asking prices suggests a point of consideration amongst some buyers and sellers. Thankfully, England’s EURO 2024 progress does not seem to have been a similar distraction.
“It’s already abundantly clear that now the political dust has settled, the post-election market is seeing a notable increase in activity in the few short days that have followed.
“It’s now a case of ready, set, go for the nation’s buyers and sellers and we expect market momentum to continue to strengthen over the summer, especially with the prospect of a rates cut due in September which could release even more pent-up buyer demand – particularly at the one million pound and above price threshold.”
CEO of Yopa, Verona Frankish:
“There’s been a great deal of noise distracting homebuyers and sellers from keeping their eyes on the prize in recent weeks, from injury time and penalty drama at the Euros, to the General Election. So it’s promising to see that despite these distractions, asking prices have remained largely unchanged and market activity has held firm.
“Given this continued display of strength, we largely expect that a summer of sustained house price growth is now on the cards and this will only increase as the reality of a base rate cut looms ever closer.”
Ruth Beeton, co-founder of Home Sale Pack:
“Although the impact of the election was always going to be minimal and momentary, it does appear to have caused some sellers to hold fire in the lead-up to polling day.
“However, those sellers are best advised to act now if they do want to make their move this year, as we expect the market will now be hit with a considerable surge in activity over the coming months and this will inevitably cause delays to transaction timelines.”
Marc von Grundherr, director of Benham and Reeves:
“Whilst England’s late run of form to reach a Euros final may have come as a surprise to many, the property sector has been largely predicting the continued resilience of the housing market for many months now.
“A brief dip in asking prices will do little to slow the momentum that has built so far this year and with the election now behind us, it’s shaping up to be a sizzling summer where property market performance is concerned.”
