Estate and letting agents are mostly optimistic this month. Will the market give them what they are hoping for?
- Last month, signs were that housing market activity might pick up after the election. That hasn’t happened yet: the RICS UK Residential Market Survey for July found that more agents reported an increase in buyer enquiries than a decrease for the first time in four months (a net balance of +2% – in other words, 2% more agents reported an increase than a decrease), but a majority also reported that sales agreed had fallen (net balance of –6%).
- However, they expect a recovery soon. A net balance of +30% of agents think sales will increase in the following three months, and +45% expect them to increase over the next 12 months.
- High interest rates have been a key factor in keeping demand low. But on 1 August, the Bank of England made its first interest rate cut since 2020, bringing the rate to 5%. Commercial lenders have already been cutting their fixed rates.
- Estate agents will hope that the deals on offer spur buyers into action, but they aren’t necessarily expecting a massive surge. Rightmove Director Tim Bannister says that mortgage rates are still high and doesn’t expect major cuts in the short term.
- House price growth may already be rising. Halifax recorded a monthly price increase of 0.8% in July, and an annual increase of 2.3% – the highest since the start of the year. Their average house price sat at £291,268, and Amanda Bryden, Head of Mortgages, says prices should “continue a modest upward trend throughout the remainder of this year”.
- Nationwide’s latest house price index found similar results: a 2.1% annual increase in prices in July (but only a 0.3% month-to-month increase) and an average price of £266,334. But Rightmove’s July stats tell a very different story, with a month-to-month price reduction of 0.4%. As is frequently the case, they also recorded a much higher average house price: £373,493 in July.
- What about rents? The Rightmove Rental Trends Tracker for Q2 found that tenants outside Greater London paid 6.8% more year on year – an average of £1,314. In London, the average asking rent rose 3.7% to £2,661. Rightmove also found a 14% year-on-year rise in rental supply and a 16% fall in tenant demand, but warned that more investment is needed to bring the rental market into balance. The number of tenant enquiries per property is still double what it was in 2019.
