UK HOUSING MARKET GAINS STEAM FROM BOE RATE CUT, BUT UNCERTAINTIES LINGER

BoE rate cut: Britain's housing market gained fresh strength in September on the back of the Bank of England's first interest rate cut in more than three years and growing political stability following the July 4 election, according to property website Rightmove.

According to Rightmove, there was a 0.8 percent rise in average asking prices on homes in September while rolling back a 1.5 percent fall in August. It was the biggest rise for September since 2016 and one that more than doubles the typical increase around this time of year. Asking prices have risen 1.2 percent over the past year, averaging £370,759 ($487,140).

Property science head at Rightmove, Tim Bannister, called that boom back in place with the new government and a rate cut by the BoE. He has added that other uncertainties are still in place- possibly when that second rate cut may come and what pressure will be placed on consumer spending and savings with the forthcoming announcements in the October Autumn Statement.

The BoE is expected to keep the interest rate at 5 per cent when it meets on September 19. While markets had previously priced in a 30 per cent chance of an early cut, cooling wage growth now suggests the central bank might implement at least one more reduction by the end of the year.

Under Labour, with Prime Minister Keir Starmer, the government has promised to lead on reforms of the UK planning system and to enforce legally binding targets to increase housebuilding. Yet, in the short term at least, a shortage of housing supply is probably destined to remain an upward driver.

Finance Minister Rachel Reeves will publish her first annual budget on October 30, and details emerging from this statement might give additional insights into what the government has in store for housing.

Lower borrowing costs improved buyer demand, and Rightmove's survey reported that the number of sales agreed between buyers and sellers increased by 27 per cent compared to a year ago. The average five-year fixed mortgage rate stood at 4.67 per cent last week and dropped to 6.11 per cent in July 2023.

Furthermore, Rightmove reports improvement in sentiment among the housing sector with the recent drop in interest rates, commensurate findings from a recent survey conducted by the Royal Institution of Chartered Surveyors which reported a sharp increase in sales expectations. 

2024-09-16T01:17:04Z dg43tfdfdgfd