Many people have been away or enjoying some semblance of the British summer. Despite the departure from the hectic 9-5, August hasn’t been a quiet time in property. There are a variety of facts and stats to digest, starting with how a recent base rate reduction affected the housing market.
In August, the Bank of England’s monetary policy committee met to decide the fate of the base rate. With inflation hitting its 2% target, it was widely predicted for the rate to reduce from 5.25%. Indeed, the decision reflected the forecast.
Base rate reduced
The committee chose to lower the base rate to 5% - the first decrease for four years. Although not a substantial movement, it was enough to inject a sense of new confidence in the market. Just how much sentiment has shifted since the announcement was tracked by Rightmove.
Buyer demand increases
The portal continuously monitors buyer demand but it created a specific focus on the days following the base rate cut. Its point of reference was buyer demand in July 2024, versus buyer demand in July 2023. The data showed 11% growth during that 12 month period.
Rightmove then noted a surge in demand following the base rate cut. It published its findings on 19th August and year-on-year buyer demand had climbed to 19%. At the same time, the portal noted a reduction in mortgage rates, with some 5-year fixed deals below 3.85%.
Those boosted by rate cuts will find there is more choice in the sales market. A report published by Property Industry Eye revealed the number of new properties coming to market is currently 10% higher than expected. In the UK, agents are collectively advertising 34,008 new homes every week.
The report also showed buyers and sellers are finding more common ground when it comes to pricing. After months of asking prices versus final sales prices being miles apart, the gap has closed to 11.1% - well below the eight-year average. In layman’s terms, this means sellers are pricing more realistically in line with what purchasers can afford to pay.
So, what are buyers expected to pay for a property? Zoopla’s August House Price Index showed the average house price in the UK was £266,400 at the time of publication. This figure caps a seven month period where house prices have risen 1.4%
Price realistically for a rapid sale
The portal also made an important observation regarding pricing. It says homes where no price reduction was needed are taking just 28 days to sell. Conversely, homes that needed to be reduced in price by 5% or more before an offer was made took 73 days to sell.
Zoopla also reported on the UK’s rental market in August, claiming the peak of rental inflation had passed. Its figures show rents have risen by just 1.6% in the last six months, the lowest increase seen since 2021. The UK’s average monthly rent now rests at £1,232.
Short lets in the spotlight
Also in the news was Labour’s intent to reform the short lets market. It wants to follow the lead of Wales, where the Article 4 Direction is in place. This has made it harder for homeowners to turn a main residence or second home into a short-term holiday let. In Scotland, two councils currently have short-term let control areas, which is a different preventative measure.
If Labour’s plan is introduced, it wants to curtail the supply of short-let accommodation by handing local authorities greater powers to introduce planning consent for landlords, where necessary. It also wants to introduce a mandatory national register for short-term lets. A short-let licensing scheme may also form part of a long-term plan.
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