Following the news that house prices increased by +0.8% in July, following three relatively flat months, industry experts have shared their thoughts with IFA Magazine.
Liz Edwards, money expert at personal finance site finder.com said: “Today’s figures indicate that the housing market may finally be bouncing back. Last week the base rate dropped from 5.25% to 5%, and we’d already seen many lenders factor the cut into their mortgage deals before the announcement from the Bank of England. With lending rates beginning to come down, and hopefully on a more permanent basis than we’ve seen previously, it seems the market may be stabilising.
“Millions of households who are due to renew their fixed mortgages this year will be glad to see the threat of potentially crippling mortgage repayments finally beginning to subside. If we can continue on this trajectory, buyer confidence may start to stoke the market. In fact, Finder recently polled a panel of experts to ask how much they believe house prices will change by the end of 2024, and 70% expect house prices to rise by up to 2.5% by the end of the year.”
Sam Mitchell, CEO of Purplebricks, said: “The growing confidence we’ve seen take hold of the housing market in recent weeks has been supercharged by the Bank of England’s interest rate cut. With lenders already slashing mortgage rates in response to last week’s decision, buyers are beginning to move ahead with purchasing decisions they have been putting off for months.
“However, the rental market is still a complete mess and there is a significant way to go before the outlook can be said to be as positive for prospective homeowners. The focus for the coming months must be lowering the barriers to homeownership for first-time-buyers, which will only be achieved by Labour pushing forward with its plans to ‘get Britain building’.”
Nathan Emerson CEO at Propertymark comments: “It is extremely positive to see further growth within the housing sector, especially following what has been a tough time across the last few years for consumers. With inflation now down at targeted levels and with a very welcome cut in interest rates last week, Propertymark is extremely optimistic to see a real uplift across the housing sector over the coming months. Assuming the economy remains stable in September, it would be good to see the central bank continue to gradually cut interest rates as conditions permit. It is a case of all eyes on the UK Government regarding their housebuilding programme, as well as learning more regarding support for potential first-time buyers.”
Jonathan Hopper, CEO of Garrington Property Finders, comments: “In the space of a month, two handbrakes have come off the property market. Gone is the election uncertainty which suppressed activity in May and June, and last week’s decision by the Bank of England to cut the Base Rate for the first time in four years has finally allowed mortgage lenders to start reducing the cost of borrowing.
“But even if it feels like the market is cleared for take-off, the most recent hard data suggests it’s still barely at taxiing speed. The number of completed purchases and the number or mortgage approvals both fell in June.
“More recent anecdotal evidence shows that estate agents are starting to see buyer enquiries pick up as consumer confidence rises, but the summer holidays mean few agents’ phones are ringing off the hook yet, and on a regional level it’s still a very a mixed picture.
“In some areas the number of homes for sale is high compared to the number of buyers, and this imbalance is making it an out and out buyer’s market. Serious buyers who have their finance in place can often drive a very hard bargain, and in response sellers are both pricing competitively and open to offering a price reduction in return for the certainty of a sale to a ‘proceedable’ buyer.
“Nevertheless the prospect of cheaper mortgages is finally here, and many would-be buyers who had been holding off are asking themselves the question ‘if not now, then when?’
“Keenly priced new listings are receiving healthy levels of interest, and the signs are are encouraging for a busy ‘back to school’ market in September. The recovery is on, but it will be a marathon and not a sprint.”
Matt Thompson, head of sales at Chestertons, says: “Despite uncertainty about what the Bank of England’s decision on interest rates cuts was going to be on 1 August, July’s property market still saw an increase in buyer activity. This buyer confidence was not only boosted by the General Election results but also by lenders introducing more attractive mortgage products with sub-4% rates.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: “This year’s housing market has been a rollercoaster, but July saw house prices gain momentum. Affordability issues and high interest rates caused many potential buyers to put their plans on pause in recent months. However, economic indicators are broadly trending positive and consumer confidence is growing.
“The Bank of England’s recent rate cut is set to further energise the property market as we enter the second half of 2024. In response, lenders have ignited a rate war, slashing offers to stay competitive. This shift is a game-changer for prospective buyers. Lower rates translate to reduced monthly payments and increased purchasing power, potentially opening doors for those previously priced out.
“Nationwide has made headlines by reintroducing fixed-rate mortgages below the 4% mark, a move that’s sent ripples through the industry. They’ve slashed rates by up to 0.25% across their two, three, and five-year fixed rate products, setting a new benchmark for affordability. Not to be left behind, banking giants Barclays and TSB have swiftly followed suit, announcing their own rate cuts.
“For those who’ve been hesitating to take the plunge into homeownership, this could be a game-changing moment. First-time buyers, in particular, should take note. This shifting landscape could make that first step onto the property ladder more achievable than it’s been in recent months.
“As we look ahead, some financial experts are hinting at the possibility of further rate cuts later in the year. While this paints an optimistic picture, it’s crucial to remember that everyone’s financial situation is unique. For now, though, it seems the property market is offering a window of opportunity.”
Holly Tomlinson, financial planner at Quilter: “The Halifax House Price Index for July shows that house prices have edged up. The average house price increased by +0.8% in July while the annual growth rate is now +2.3%. With summer typically marking a busy period for the property market, this result following three months of relatively flat results, reflect the difficult economic conditions we find ourselves in.
“However, given that the Bank of England has cut its base rate from 5.25% to 5%, we may see the market start to heat up. Although the cut in rates will have a relatively minor impact on the amount people pay if they are on tracker mortgages or standard variable rate mortgages (SVR) and no impact if they are on a fixed rate, the change in rates does a lot for buyer and seller confidence.
“Similarly, the price of fixed-rate deals had largely already priced in a small cut to the base rate, so we have not seen a huge change in the cost of these deals.
“A feeling that rates are going in the right direction though will help many people decide to take the leap back into the market, pushing up demand for homes. Those on the fence about selling their home may also feel the time is now right.
“The autumn may therefore prove to be busier than anticipated. However, prospective buyers are now faced with a dilemma about whether to fix their mortgage now or wait for rates to come down further. Lots of clients in the midst of remortgaging or buying are considering tracker mortgages without early repayment charges, allowing them to benefit from future rate cuts with the option to fix when rates are lower. However, many people like the certainty of a fixed-rate deal.
“Further house price rises, while naturally good news for homeowners, continue to make it incredibly difficult for first-time buyers to find a route to homeownership without significant help from the Bank of Mum and Dad or having to wait until much later in life to build up the necessary size of deposit. This will end up being a difficult area for the government to truly tackle, as while supply and demand play a large part in why house prices are rising, an even bigger piece of the puzzle is slow wage growth when compared to house price inflation.”
