The first Bank of England (BoE) rate cut in four years has sparked a resurgence in the property market, with reduced mortgage costs attracting more buyers and pushing up house prices. According to Rightmove, inquiries from potential buyers to estate agents surged by 19% in August compared to the same period last year. This follows an 11% increase in July.
The BoE cut its base rate on 1 August from 5.25% to 5%, the first reduction since the Covid pandemic began. This move follows a drop in inflation to more manageable levels, despite a slight increase to 2.2% in July. Although this remains above the Bank’s 2% target, it’s significantly lower than the 11.1% peak reached two years ago.
Rightmove noted that the rate cut had accelerated the availability of cheaper mortgages, significantly boosting buyer demand. As a result, the company revised its 2024 house price forecast from a 1% decline to a 1% increase in new seller asking prices. With further rate cuts anticipated, potentially lowering the base rate to 3.5% by the end of next year, a buoyant autumn property market is expected.
Although the average new seller’s asking price dropped by 1.5% in August, reflecting the usual seasonal trend, the overall outlook for the property market has improved.
Political stability and an improved economic outlook have sparked renewed buyer interest. However, housing affordability continues to challenge many families.
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