From the general election to Euro 2024 and Wimbledon, there has been plenty to keep potential homebuyers busy in recent weeks but sellers are adopting new tactics to boost demand.
The latest Rightmove House Price Index shows average new seller asking prices dropped by 0.4% this month in the build-up and immediate aftermath of the general election – a larger July drop than usual.
This is a bigger drop than the 20-year July average of a 0.2% decline.
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It puts the average UK asking price at £373,493, down £1,617 since last month but up 0.4% annually.
The number of new sellers coming to market is a steady 3% above last year, while the level of sales agreed has increased by 15%.
But high mortgage rates and other political and sporting distractions such as Euro 2024 and Wimbledon appear to have held back potential purchasers so far this month, with demand down 2% among first-time buyers, Rightmove says.
The property website adds that expectations of an interest rate cut in the coming months could boost the property market, especially if mortgage pricing drops.
“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,” says Tim Bannister, director of property science at Rightmove.
“The average five-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.”
The post-election property market
Rightmove’s latest index covers properties listed by estate agents from 9 June to 6 July 2024, so it covers the pre-election period and just after.
The data suggests sellers are putting their property up for sale with lower prices to attract buyers, particularly at the top of the market where asking prices dropped 1.3% on a monthly basis and by 1% annually to £681,096.
The typical price of a first-time buyer home was up 0.1% on the month and by 1.1% annually to £227,924, while the average asking price for a second stepper home fell 0.1% between June and July and rose by 0.8% since last year to £343,617.
Regionally, asking prices have dropped by the most in the South East of England on a monthly basis, down 2%.
The largest annual drop was in the South West, with a 1% decline.
Sellers in the North of England appear to be the most optimistic though.
Average asking prices are up by 3.5% annually in the North West of England and by 4.6% in the North East.
Bannister adds that buyers across the UK may now be buoyed by political stability following the general election result.
“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,” adds Bannister.
“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.”
Bannister suggests first-time buyers still need support, especially with their budgets stretched to the limit by high mortgage rates and some also facing higher stamp duty fees when the current thresholds are set to revert in March 2025.
Is now the time to buy?
Rising mortgage rates and high inflation have hit buyer purchasing power this year, causing a slowdown in property sales and house prices.
But inflation has fallen back to the Bank of England’s target and an interest rate cut could be on its way.
Additionally, buyers and sellers may be reassured by the stability of a new Labour government, which has promised policies that could affect the property market such as its Freedom to Buy scheme to support first-time buyers.
This may make the coming months an optimum time to buy a property, especially if the cost of borrowing falls
It may also mean there is more competition though, which could push house prices up.
Many buyers and sellers could also wait for the outcome of this week’s King’s Speech or even chancellor Rachel Reeves’ first Budget in the coming months to see if there are any policy or tax changes that affect them.
“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,” says Nathan Emerson, chief executive of estate agency trade body Propertymark.
“Once we start to hear more news from the new UK government about how they intend to build 1.5m 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.”
Matt Thompson, head of sales at Chestertons, adds that Labour’s election win has left buyers more confident to resume their property search this month.
“This is well-timed as we have also seen more homeowners putting their property up for sale, giving house hunters more choice,” he says.
“Boosting buyer demand further are mortgage rates as some lenders started offering more attractive mortgage products. We therefore predict July’s property market to remain busier than in previous years.”