The UK housing market is experiencing a noteworthy shift as declining mortgage rates bolster buyer interest. This change has led to an increase in the number of homes listed, relieving some pressure on house prices.
Estate agents across the UK report the highest number of listings in over a decade, a trend driven by more affordable borrowing options. This development is providing potential buyers with greater choice and stabilising the housing market.
Data from Rightmove indicates a significant rise in property listings, with branches now marketing an average of 63 homes, the most since 2014. The pandemic period saw a scarcity in housing stock due to the heightened demand and stamp duty holidays, which drove prices to high levels.
As more homes become available, buyers are gaining greater negotiating power, slowing the rapid growth in house prices. In October, the average asking price on Rightmove rose modestly by 0.3% rather than the typical 1.3% seen in autumn.
The decline in mortgage rates is a primary factor encouraging buyers. The average five-year fixed rate has decreased to 4.6%, down from its peak of 6.1% in July 2023. This drop has facilitated an increase in agreed sales by 29% compared to last year.
Estate agents report a 17% rise in inquiries from potential buyers, indicating recovery after a period of stagnation attributed to previously high mortgage rates.
With more affordable rates, the market shows signs of revival.
The mid-market segment has seen the most significant rise, with properties like three-bedroom homes gaining 1.7% year-on-year.
In contrast, larger homes have seen a slight decrease in value, with prices for five-bedroom and four-bedroom detached houses dropping by 0.2%.
Some buyers are postponing decisions, particularly at the high end, awaiting clearer fiscal policies.
There is optimism for an active 2025, with expectations of further interest rate reductions and wage growth outpacing house price inflation.
Bannister notes potential market optimism following the next budget and possible bank rate cuts, similar to trends seen in 2022.
Industry leaders highlight the importance of competitive pricing in the current market, emphasising the need for sellers to adapt to the increased buyer options.
Experts suggest a continued focus on mid-market properties due to their stable appreciation rates.
Analysts also predict that the smallest price gains will likely continue in higher-end properties, impacted by potential policy changes.
Current buyer behaviour trends indicate a preference for competitively priced homes, aligning with the increased market offerings.
Potential buyers continue to weigh fiscal developments before making significant investments, especially in the upper market segments.
The easing of mortgage rates is breathing new life into the UK housing market, empowering buyers and leading to a stabilisation in house prices. With an increase in listings and a positive outlook for further rate cuts, the market is poised for growth.
As the sector adjusts to these new conditions, both buyers and sellers are finding more opportunities to engage in transactions, setting the stage for a more balanced and active market environment.
