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Rightmove Reports New Record High for Average British House Price

Rightmove Reports New Record High for Average British House Price

Mortgage rates have remained elevated, but the cuts to lender rates in the first quarter due to a competitive market brought about by declining inflation optimism helped fuel buyer demand. The lower rates, some below the Bank of England’s standard base interest rate of 5.25%, motivated hopeful home buyers to return to the housing market. Even as optimism dimmed for a springtime cut to the base rate and lender rates began to rise, buyers were not deterred. The surprise result in the second quarter of this year is the average house price hit a new record high of £375,131.

The data released for May by Rightmove could cause many to turn their attention to the current state of the housing market. 

Sellers that had been holding out for stronger demand in the market when the Bank’s Monetary Policy Committee (MPC) votes for the first rate cut since March 2020, could view this as an opportunity not to be missed. More properties could show up on the market and in turn that will help feed more demand from buyers.

In addition, homeowners have spent the last two years fearing a decline in the average house price which could translate to a loss in property value. If their property value had declined to less than their debt, the state of negative equity would keep them from being able to remortgage and escape their lender’s standard variable rate (SVR). With a new record high in the average British house price, that fear has been extinguished for now.

Rightmove reported the average property price coming onto the housing market had risen by 0.8%, or £2,807, in a month-on-month comparison.

For the first four months of the year, there was a 17% increase in the number of agreed sales compared to the same period in 2023. It is not unusual for May to have a boost in the market, spring often brings out more buyers, as twelve of the last twenty-two years of data reveal an increase in the average house price. The last record high was in May 2023, and the new one set for May 2024 is only slightly higher at a 0.6% increase.

Tim Bannister, director of property science at Rightmove, remarked, “The momentum of the spring selling season has exerted enough upwards price pressure to reach a new record asking price.”

The Rightmove forecast for 2024 is the completion of 1.1 million house sales, if the momentum is not slowed by the bottle necking of getting from the offer to the purchase. The average length of time between the agreement between seller and buyer to the legal completion of the purchase is five months. The average time for a seller to come to market and get to legal completion is an average of seven months. Considering the time involved, a seller hoping to complete their sale by year end would need to be coming to the market by end of May.

Lenders have recently cut their rates on mortgage products as again optimism grows for the MPC to make a rate cut in summer. The latest forecast is for August, while there is also excitement building for one as soon as June. There will be two inflation reports before the next MPC meeting and should the reports show the expected declines toward the target inflation rate of 2.0% from the current 3.2% a rate cut could surely occur.

The MPC will likely only offer a slight cut to the base rate of 0.25%, taking the rate to 5.0%, but it will offer optimism for at least one more cut to come this year, if not three in total. 

The next inflation report is due on the 22nd, and the following one will be released on 19 June. The MPC will then meet on 20 June. The last meeting of the MPC was the second consecutive meeting in which at least one member voted for a rate cut, with the meeting in March having one member voting for a cut. It was a turning point in the outlook as there had not been a vote for a rate cut in two years till that meeting.

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