The UK housing market experienced a notable upswing in September, buoyed by the Bank of England’s (BoE) first interest rate cut in over three years and increased political stability following the July 4 election, according to property website Rightmove.
Rightmove reported that the average asking price for homes increased by 0.8% in September, rebounding from a steep 1.5% decline in August. This monthly rise was double the average for this time of year in the series, marking the largest September increase since 2016. Compared to the previous year, asking prices were up 1.2%, reaching an average of £370,759 ($487,140).
Tim Bannister, Rightmove’s director of property science, emphasised that the housing market found renewed energy due to the formation of a new government and the BoE’s rate cut—the first since 2020. These developments fostered a more optimistic environment for buyers and sellers alike.
However, Rightmove also highlighted continued uncertainties on the horizon, such as the potential for a second Bank Rate cut and the impact of expected announcements in October’s Autumn Statement on various market segments.
The BoE is anticipated to maintain the interest rate at 5% on September 19. Last week, market speculation placed a 30% probability on an early rate cut, although cooling wage growth is likely to lead the BoE to reduce rates again before the year concludes.
The Labour government under Prime Minister Keir Starmer has committed to reforming Britain’s planning system, introducing mandatory targets to expedite housebuilding. Nevertheless, the ongoing shortage of housing supply is expected to sustain upward pressure on prices in the medium term.
Meanwhile, Britain’s finance minister, Rachel Reeves, is preparing to present her initial annual budget on October 30, which may further influence market dynamics.
Rightmove’s monthly survey noted a 27% increase in sales agreements between buyers and sellers compared to the previous year, driven by improved buyer demand due to reduced borrowing costs. The average rate for a five-year fixed mortgage last week was 4.67%, a significant drop from the 6.11% rate observed in July 2023.
Complementing Rightmove’s findings, other indicators of Britain’s housing market have also shown positive sentiment following the recent reduction in interest rates. A widely watched report by the Royal Institution of Chartered Surveyors last week revealed a substantial surge in sales expectations for the coming months, signalling growing confidence among industry professionals in the housing sector’s resilience.
