The UK housing market is experiencing a shift as mortgage rates decrease.
- Estate agents are now listing an average of 63 homes, the most since 2014.
- This increase in supply gives buyers more negotiating power, stabilising house prices.
- Falling mortgage rates have led to a 29% rise in agreed sales and a 17% increase in buyer interest.
- Experts remain optimistic about future market activity, despite current uncertainties.
Data from Rightmove indicates that the average number of homes being marketed by estate agents in the UK has risen to 63, a 12% increase from last year and a level not seen since 2014. During the pandemic, the housing market faced a shortage of available homes which, coupled with high demand and stamp duty holidays, led to a surge in house prices. Currently, the increase in housing supply is providing buyers with more negotiating power, slowing the growth rate of prices.
In October, the average asking price for new listings on Rightmove saw a marginal increase of only 0.3% to £371,958, compared to a typical 1.3% rise during the busy autumn season. According to Tim Bannister, head of property data at Rightmove, the current situation offers buyers a greater choice, compelling sellers to set competitive prices amid ongoing affordability challenges.
Mortgage rates, particularly the average five-year fixed rate, have fallen to 4.6% from a peak of 6.1% in July 2023. This reduction is encouraging more potential buyers to re-enter the market, many of whom need to sell their existing properties. Consequently, agreed sales have surged by 29% year-on-year, and enquiries from prospective buyers have increased by 17%. This trend signals a recovery phase for the market after a period of stagnation caused by rising mortgage rates.
Rightmove reports that asking prices have risen by 1% over the past year, with mid-market properties, like three-bedroom homes, experiencing the largest gains at 1.7% year-on-year. In contrast, prices for higher-end properties such as five-bedroom houses have slightly decreased by 0.2%. Tim Bannister highlights that buyers in the high-end market are waiting for more fiscal certainty before making purchasing decisions.
Despite prevailing market uncertainties, Tim Bannister expresses optimism for 2025, forecasting active market conditions. Expectations for further interest rate reductions and wage growth surpassing house price inflation are projected to enhance affordability, potentially spurring a resurgence in market activity reminiscent of the summer of 2022.
The current dynamics in the housing market, driven by changing mortgage rates and increased listings, suggest a stabilising trend with cautious optimism for the future.
