Close Menu
Invest Insider News
    Facebook X (Twitter) Instagram
    Wednesday, July 2
    Facebook X (Twitter) Instagram Pinterest Vimeo
    Invest Insider News
    • Home
    • Bitcoin
    • Commodities
    • Finance
    • Investing
    • Property
    • Stock Market
    • Utilities
    Invest Insider News
    Home»Property»What comes next for UK house prices?
    Property

    What comes next for UK house prices?

    August 6, 20245 Mins Read


    • Bank of England rate cut was preceded by mortgage costs falling
    • Further borrowing cost cuts will be slow but impactful
    • Long-term factors affecting the housing market have not shifted, however

    The news for which would-be homeowners, or those looking to make a move, were hoping finally arrived last week, when the Bank of England (BoE) cut the base rate to 5 per cent. A dark cloud has hung over the property market ever since Liz Truss and Kwasi Kwarteng’s ill-fated afternoon at the dispatch box, with rising mortgage rates and crippling inflation hitting affordability and sending price growth into reverse. But real wages are now rising, the economy is improving and falling base rates should lower borrowing costs. Is this all enough to kickstart the property market?

    Some evidence has appeared already. Mortgages are priced off swap rates, rather than the base rate, and the former have already been pricing in a cut by the central bank. Figures from Moneyfacts, a data provider, show the average rate on a two-year fix had dropped to 5.77 per cent at the start of August, down from 5.95 per cent a month earlier. In the same period, Nationwide data showed house prices rose 0.3 per cent, the third month in a row, and above the 0.1 per cent rise that had been expected, albeit transaction volumes were fairly similar month on month.

    However, the early pricing moves by lenders mean that any subsequent change in mortgage rates and property market sentiment will be gradual. Moneyfacts’ Rachel Springall says it could take a few more weeks for things to really accelerate. “I still expect mortgage rates to drop further. At the moment there are only two lenders with sub-4 per cent fixed-term deals and more will want to be competitive,” she adds.

    Mortgage costs

    Clearly, the market is also still a long way from where it was two years ago. In August 2022, before the ‘mini-Budget’, the average two-year fixed-rate deal cost just 3.95 per cent – nearly 2 percentage points cheaper than the current level. Similarly, Nationwide chief economist Robert Gardner notes that transactions are still 10 per cent lower than before the pandemic – the last ‘normal’ period for the market when it was not affected by the spike in gilt yields, the pandemic-driven rush for space or a stamp duty holiday.

    Nonetheless, analysts are adjusting expectations based on general economic positivity and the arrival of base rate cuts. Capital Economics’ UK team suggests prices will remain flat for the rest of this year but rise 5 per cent in 2025 and another 4 per cent in 2026. They say: “Our forecast is that Bank Rate will be lowered by more than investors anticipate and the average mortgage rate could fall from 4.8 per cent now to a little below 4 per cent by the end of 2025. That would reinvigorate demand by making buying affordable again for many who are currently priced out.” 

    Aneisha Beveridge, head of research at Hamptons, agrees and says there is scope for mortgage rate falls to boost housing market sentiment further. She says a “feel good factor” from the change in government could also increase activity. “Mortgage rates have fallen quicker than we anticipated, while income growth has stayed high, improving the affordability picture for buyers. We also expect transaction numbers in 2024 to rise 10 per cent compared with last year, with even more moves happening next year.”

     

    Don’t get carried away

    However, there are still longer-term factors at play affecting both supply and demand, which will temper house prices, and keep transactions and prices below the pandemic peak. In May, Savills suggested a more tepid growth figure of 3.5 per cent. Lucian Cook, director of residential research, says the estate agent is sticking with this forecast despite recent developments. “We aren’t getting carried away,” he adds. 

    Savills thinks that house prices remained too resilient throughout the cost of living crisis and mortgage market chaos – the average house is only 2.8 per cent cheaper now than during the summer of 2022.

    This means longer-term affordability issues have not gone away. This is, as expected, most acute in London and the south-east, where house price growth is forecast to be 2 per cent in 2025, versus the national average of 3.5 per cent.

    UK house prices

    In addition, longer-term forecasts for house prices need to factor in changes in supply. Should Labour actually achieve its housebuilding target of 300,000 new homes every year, population-growth-driven price increases could temper. However, it is difficult to suggest how, if and when this would take place given the regional nature of house prices. Then there is the difficulty in actually building that many homes, as Robin Hardy covers here.

    The housing market slump once feared when the BoE rate hit 5.25 per cent in August 2023 did not materialise. However, the once automatic prediction of ‘house prices always go up’ may not ring true without fundamental changes to affordability and plans to significantly boost supply.

    Read more of our economics coverage



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Previous ArticleBitcoin (BTC) ETFs Saw Outflows During Crypto Price Crash, but Large Holders Bough the Dip
    Next Article Brownstone banquet hall $137K behind on property tax payments

    Related Posts

    Property

    China’s economy beats the gloom. Can it do more?

    July 1, 2025
    Property

    Ayrshire seaside town named cheapest in the UK for property

    July 1, 2025
    Property

    Technofil USA to open wire manufacturing facility in November in Humble

    July 1, 2025
    Leave A Reply Cancel Reply

    Top Posts

    Action Ganglong China Property Group Limited | Cours 6968 Bourse Hong Kong S.E.

    July 31, 2007

    les fondamentaux de l’or restent bons

    September 4, 2007

    les fondamentaux de l’or restent bons

    September 4, 2007
    Stay In Touch
    • Facebook
    • YouTube
    • TikTok
    • WhatsApp
    • Twitter
    • Instagram
    Latest Reviews
    Bitcoin

    Bitcoin vend des murs: les baleines encaissant ou fixant un piège près de la BTC de tous les temps?

    May 17, 2025
    Bitcoin

    Goodbye $60,000 Bitcoin? Traders Bracing for $58,000 Drop

    October 11, 2024
    Stock Market

    Asia stocks muted; China shares rise as GDP meets expectations By Investing.com

    October 18, 2024
    What's Hot

    Utilities have so far handled the blizzard well, but things could change

    January 22, 2025

    Yes, China and other hostile nations should not own property in Texas

    May 14, 2025

    Crude oil futures jump after US court blocks Trump tariff plan 

    May 28, 2025
    Most Popular

    DocuSign stock soars to 52-week high, reaches $70.34 By Investing.com

    October 16, 2024

    Legendary Trader Brandt Warns Bitcoin Price Might Collapse by More Than 75%

    October 11, 2024

    Loop Capital maintains Amazon Buy rating, steady stock price target By Investing.com

    July 22, 2024
    Editor's Picks

    Le paiement en bitcoin séduit une poignée de commerçants à Auxerre

    February 12, 2025

    Asia’s markets rebound after worldwide plunge on Monday amid US recession fears | US News

    August 6, 2024

    Value & Indexed Property repasse dans le vert et surpasse son indice de référence

    June 11, 2025
    Facebook X (Twitter) Instagram Pinterest Vimeo
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions
    © 2025 Invest Insider News

    Type above and press Enter to search. Press Esc to cancel.