Plea for Bank of England to cut interest rates as house prices remain at record high
A study by Rightmove puts the average figure for property coming onto the market at £375,110 in June, which is just £21 below the previous high in May.
Andrew Bailey explains decision to hold interest rates at 5.25%
House prices remain at a near-record high with no sign the General Election has hit activity, according to a new study issued this morning.
The study by Rightmove puts the average figure for property coming onto the market at £375,110 in June, which is just £21 below the previous high in May.
The figures have prompted renewed calls from property experts to the Bank of England to cut the base rate from its 16-year high of 5.25 percent this week to make buying a home more affordable.
Rightmove found that less expensive and more northerly regions are seeing stronger price growth this month, with five of the six cheapest regions reaching new price records while the higher-priced East of England and London lag behind
It said that the majority of buyers and sellers have continued their plans since the election was called, with the only sign of election caution being a slight drop in the number of new sellers especially at the typically more discretionary top-end of the market.
Over the last four weeks, the number of sales being agreed has stayed steady at 6 percent higher than a year ago
Buyer demand has also remained stable and is now 5 percent higher than last year.
Rightmove said the figures support a poll of more than 14,000 people, where 95 percent of those planning to move home said that the election will not affect their plans
In the two weeks since the surprise election announcement, the number of top-end sellers coming to market is 3 percent lower than a year ago, versus 11 percent higher in the previous two-week period
Stubbornly high mortgage rates continue to stretch affordability, with many future movers likely to have a closer eye on when the first Bank of England rate cut might be, rather than pre-election housing market promises:
The average 5-year fixed mortgage rate is now 5.04 percent, compared with 4.94 percent in January
Tim Bannister, Rightmove’s Director of Property Science, said: "It’s always difficult to predict how home-movers will react to sudden uncertainty, but looking back through our data, we can see that during previous election campaigns, market activity has remained largely steady.
"This election has followed a similar pattern so far, and the responses from our poll of over 14,000 people also support the data, with the vast majority of respondents saying they will carry on with their home-moving plans.
"However, some potential sellers appear to be watching and waiting rather than taking action, evidenced by a dip in the number of new sellers coming to market, particularly at the top-end.
"This is understandable when many of these sellers have more flexibility over when they act, but overall, it appears to be business as usual for the mass market.”
Housing has started to play a bigger role in the election campaign, with a flurry of manifesto pledges shared in recent days.
Mr Bannister added: "It has been encouraging to see housing get more attention, however, many manifesto promises so far are continuations of existing schemes, revivals of old policies, or ideas which are only likely to help very specific parts of the market.
"The timing of Bank of England rate cuts is likely to be of greater concern than manifesto housing promises to the majority of home-hunters."
He continued: "Mortgage rates remain stubbornly elevated, with the current average five-year fixed rate now at 5.04 percent. While this is improved from the peak of 6.11 percent in July 2023, it is still higher than the beginning of the year when it was 4.94 percent.
"If a Bank of England Base Rate cut can lead to lower mortgage rates, it will have a much wider and immediate impact on the market than the bespoke housing policies announced so far.
"Mortgage rates have been elevated for much longer than most expected, and a first cut to the Base Rate would be a big boost to mover confidence, as well as having a far-reaching impact on the market should it, as expected, lead to lower mortgage rates."
The chief executive of Propertymark, Nathan Emerson, said: "It’s extremely positive to see stability within the housing market and despite a challenging period of high inflation and elevated interest rates, we are witnessing people approach the market with growing confidence.
"If conditions permit, we are hopeful to see the Bank of England start reducing the base rate when they next meet on Thursday. Should this happen, a potential raft of competitive mortgage deals over the coming weeks would be very welcome news for many people.”
