Home buyers shopping in the UK housing market have more positives than a few months ago, and this is causing experts to predict an uptick in purchasing. Mortgage interest rate offers are lower as lenders have become both optimistic and competitive. Offers have fallen below the recently reduced Bank of England’s standard base interest rate of 5.0%. Also, while inflation has slightly increased above the target rate of 2.0%, it is expected to remain near target offering relief that will trickle down and be felt by consumers soon. In addition to relief from lower inflation and lower interest rates, the supply of listed properties on the market has grown, which helps buyers have more leverage power than before. According to a recent report from Zoopla, the average estate agent has thirty-three unsold homes listed, which is the highest level since 2017.

The highest average of unsold homes per estate agent listing homes for sale on Zoopla is a seven-year high. Buyer demand is reported at a fifth higher and new supply is up 12% and the total stock of listed properties is up 14% according to Zoopla.

The online property lister credits the increases to the lower levels of activity from last year when inflation had not yet reached target, and the base interest rate was at a 16-year high of 5.25%. 

The increase in attention from home buyers coupled with the increase of listed properties for sale has triggered sellers to be competitive and one in five homes experienced a cut of 5% or more of the asking price in August. This is an above average level of price cutting by sellers.

Competitive pricing helps sellers get a buyer quicker with an average of 28 days, but if the property is overpriced and then reduced by 5% or more, it takes an average of 73 days. 

Zoopla’s house price index report revealed the average UK house price has increased by 1.4% in the seven months to July for 2024. The average house price is £266,400. The expectation for the year is growth of 2.5% or higher.

Executive director of Zoopla, Riichard Donnell, commented on the recent report, “Momentum in the sales market continues to build as mortgage rates drift lower and more and more sellers gain the confidence to list their home for sale. Buyers have much greater choice which will support sales numbers, but this will keep price rises in check. 

“Buyers have less purchasing power than two to three years ago and remain price sensitive meaning sellers can’t afford to get ahead of themselves on where to set the right price for their home. If you need to cut the asking price by 5% or more then your home will take twice as long to sell or may not sell at all.”

The market could receive an even greater boost in buying if the Bank of England’s Monetary Policy Committee (MPC) offers another cut to the standard base interest rate. The first reduction since March 2020 was voted for at 5 to 4 during the August MPC meeting of 0.25% taking the rate from 5.25% to 5.0%. 

Another rate cut is forecasted before the end of the year. Many had hoped it would be sooner rather than later with a September vote to cut the rate again. However, inflation has risen slightly and is expected to remain so for the rest of the year followed by a decline to under target of 2.0% in the first half of 2025. The next inflation report will be released 18 September, the day prior to the next scheduled MPC meeting. If inflation appears under control overall as well as controlled in specific sectors of the economy such as with the services sector, then a cut might occur. However, it is more likely to come later according to experts.

There will not be a MPC meeting in October, making the first opportunity for a rate cut past September to happen in November. It has been noted, this could trigger a larger spending event for the holiday season, which could give an unwanted increase to inflation. However, with no MPC meeting in January 2025, a November rate cut could be followed by inactivity to the then 4.75% rate until February allowing things to naturally correct.

Whether or not there is another rate cut this year or in early next year, the fact there are already mortgage offers below the current 5.0% available and other attractive deals for home buyers, as well as for homeowners in need of a remortgage, there is little reason to wait for better deals when they are in fact likely already here.