(Bloomberg) -- Asking prices for UK houses increased at double their long-term average pace in September, signaling new optimism by home-sellers in the wake of the Bank of England’s first interest-rate cut in more than four years.
The average price of homes coming to the market rose 0.8% to £370,759 ($487,000), property site Rightmove said in a report released on Monday. While sellers typically hike prices in September, the scale of this month’s rise signals lower borrowing costs and more properties up for sale are unlocking pent-up demand building up over the last year.
Buying a home is becoming more affordable thanks to rising real incomes and easing mortgage costs after the BOE’s first interest-rate cut since the pandemic on Aug. 1. Demand has risen, while the average number of available properties per estate agent is at its highest since 2014, Rightmove said. That’s pushed up the number of agreed sales by more than a quarter compared to 2023.
“The autumn action has started early with a strong rebound in activity from both buyers and sellers compared to the subdued market at this time last year,” said Tim Bannister, Rightmove’s director of property science. “The certainty of a new government followed by the first bank rate cut in four years invigorated the market, opening a window of opportunity for movers to act.”
House prices are now 1.2% higher than a year earlier. A recent report from the Royal Institution of Chartered Surveyors indicated buyer demand and sales rose in August, while Halifax figures showed house prices getting close to record highs last month.
The construction of UK homes is also growing at its fastest pace in almost two years. That’s good news for Prime Minister Keir Starmer, who put a plan to build 1.5 million new homes over the next five years at the heart of his pitch to voters.
Still, experts cautioned there are pockets of uncertainty in the market. One big unknown is the budget on Oct. 30, when Chancellor Rachel Reeves is expected to raise taxes to plug what she says is a £22 billion black hole in the public finances.
“It is important to consider what effect the budget at the end of next month may have on the housing market and if today’s figures reflect a keenness by consumers to complete on a property before any potential changes to the current tax structure might be announced,” said Nathan Emerson, chief executive officer of Propertymark.
The average time of matching sellers and buyers is now 60 days, three days more than last year as buyers remain price sensitive, Rightmove said. And the average five-year fixed mortgage rate is still 4.67%, down from the 6.11% peak in July, but almost double levels seen in September three years ago.
A tight jobs market helped cushion household incomes during last year’s recession, preventing a large decline in house prices. That’s now starting to unwind as businesses slow down hiring in response to policy uncertainty ahead of the budget, as well as higher costs due to increases in the minimum wage earlier this year.
Figures from the Recruitment & Employment Confederation published Monday showed employers posted 3.2% fewer vacancies in August compared with the previous month, with openings declining across most UK regions.
“There is no doubt that the jobs market remains slow by comparison to previous years, with summer holidays also affecting the pace of hiring,” said Neil Carberry, REC Chief Executive.
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