Taking note: Reeves speaking to a student during a visit to Silverstone University Technical College in Towcester, central England. With the Exchequer’s budget on Oct 30, experts caution that there are still pockets of uncertainty in the market. — AFP
LONDON: Asking prices for UK houses increased at double their long-term average pace in September, signalling new optimism by home sellers in the wake of the Bank of England’s (BoE) first interest rate cut in more than four years.
The average price of homes coming to the market rose 0.8% to £370,759 (US$487,000), property site Rightmove said in a report released yesterday.
While sellers typically hike prices in September, the scale of this month’s rise signals lower borrowing costs, and more properties up for sale are unlocking pent-up demand that has built up over the last year.
Buying a home is becoming more affordable thanks to rising real incomes and easing mortgage costs after the BoE’s first interest rate cut since the pandemic on Aug 1.
Demand has risen, while the average number of available properties per estate agent is at its highest since 2014, Rightmove said.
Compared with 2023, the number of agreed sales has increased by more than a quarter.
“The autumn action has started early with a strong rebound in activity from both buyers and sellers compared to the subdued market at this time last year,” said Tim Bannister, Rightmove’s director of property science.
“A new government’s certainty and the first bank rate cut in four years energised the market and created a window of opportunity for movers to act.”
House prices are now 1.2% higher than a year earlier. A recent report from the Royal Institution of Chartered Surveyors indicated buyer demand and sales rose in August, while Halifax figures showed house prices getting close to record highs last month.
The construction of UK homes is also growing at its fastest pace in almost two years.
That’s positive news for Prime Minister Keir Starmer, who put a plan to build 1.5 million new homes over the next five years at the heart of his pitch to voters.
Still, experts cautioned there are pockets of uncertainty in the market.
One big unknown is the budget on Oct 30, when Chancellor Rachel Reeves is expected to raise taxes to plug what she said is a £22bil black hole in the public finances.
“It is important to consider what effect the budget at the end of next month may have on the housing market, and if today’s figures reflect a keenness by consumers to complete on a property before any potential changes to the current tax structure might be announced,” said Nathan Emerson, chief executive officer of Propertymark.
According to Rightmove, the average time for matching sellers and buyers is now 60 days, three days more than last year, as buyers remain price-sensitive.
The average five-year fixed mortgage rate is still 4.67%, down from the 6.11% peak in July, but almost double the levels seen in September three years ago.
A tight job market helped cushion household incomes during last year’s recession, preventing a large decline in house prices.
That’s now starting to unwind as businesses slow down hiring in response to policy uncertainty ahead of the budget, as well as higher costs due to increases in the minimum wage earlier this year.
Figures from the Recruitment and Employment Confederation published yesterday showed employers posted 3.2% fewer vacancies in August compared with the previous month, with openings declining across most UK regions.
“There is no doubt that the job market remains slow by comparison to previous years, with summer holidays also affecting the pace of hiring,” said Neil Carberry, REC chief executive. — Bloomberg
