The recent Bank of England rate cut, the first in four years, has sparked a surge in the UK property market. Cheaper mortgages have attracted increased buyer interest, with a 19% rise in potential buyers contacting estate agents since the rate cut. This follows a period of high borrowing costs due to inflation concerns.
The rate cut, from 5.25% to 5%, has also led to improved buyer demand and availability of cheaper mortgages from high street lenders. Rightmove forecasts a buoyant autumn property market, upgrading its house price forecasts from a 1% drop to a 1% rise in new seller asking prices.
Further rate cuts are expected, with markets anticipating rates to potentially drop to as low as 3.5% by the end of next year. The Bank of England is expected to keep rates on hold at its next meeting in September, with possible reductions in borrowing costs in November.
While average new seller asking prices have fallen slightly this month, the market is anticipated to become more active as the summer holiday season ends. Increased political certainty and a brighter economic outlook post the general election are also contributing to the improved buyer engagement.
However, despite the positive sentiment in the property market, borrowing costs are still higher than three years ago, and housing affordability remains challenging for many families. As a result, price growth is expected to be around 3% in the UK this year.
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