It may have taken a while, but it seems the long-anticipated release of pent-up demand in the housing market is finally starting. Initial Autumn sales are booming and many are predicting that demand will carry through the season even as the weather cools and the nights draw in.
Latest House Price Index data shows increased activity
Rightmove’s latest House Price Index for September showed that increased activity levels had pushed the average new seller asking price up by 0.8%, double the long-term average September increase. It also showed a rise of 27% in the number of sales agreed between buyers and sellers compared to last year.
Sellers have become more confident in moving with a year-on-year increase of 14% in the number of new sellers coming to the market. The number of potential buyers contacting agents is also up, increasing 15% compared to the same time last year.
Meanwhile, estate agents now boast an average of 33 properties per branch – the highest figure since 2014.
Interest rate impact
The activity is fuelled partly by August’s base rate cut by the Bank of England’s Monetary Policy Committee to 5% which started to filter through to mortgage rate cuts. Although the base rate was held at 5% in October many are anticipating a further cut to the base rate in November with the next update due on the 7th. Some believe a third cut could follow in December, although this may be optimistic.
HMRC data also shows activity increase
Nevertheless, confidence in the market returned early. HMRC provisional data released at the end of September showed a 10% year-on-year increase in residential housing transactions to 104,300 in August. The figure was also 8% higher than for July this year. This is likely to have been in anticipation of the interest rate cut since the statistics are somewhat delayed.
Lenders began cutting mortgage rates and additional cuts, as well as an easing of lending criteria by some lenders, are expected to lead to further increases in buyer and seller interest in the coming weeks. There are already a range of five and two-year fixed rates at under 4% which is expected to provide a boost for interested buyers and additional sales this Autumn.
Caution remains
But despite the initial early Autumn activity proving stronger than expected, some caution will remain. The end of October will see the announcement of Labour’s first Budget and with continued warnings of the state of government finances, the news for property buyers and sellers may not be pretty. An increase in capital gains tax is amongst several predicted measures and other changes to taxes are also likely.
However, it’s also hoped that there will be practical changes to help reassure sellers and to encourage more people to get back on the property ladder and buying again.
Many will also be waiting for further downward movements in mortgage rates to improve their affordability to buy – something that is only likely to happen with further interest rate cuts and greater certainty over the Budget announcements. Despite this, the fact that Autumn sales are ahead of schedule is encouraging.
For more information on how we can assist you on your sales journey, please contact one of our branches in Essex, London or Hertfordshire today. We also offer a free and instant online valuation to give you an idea of how much your home could be worth on the current market.
