Experts expect housing market activity to heat up with falling interest rates
UK house prices grew at the quickest rate since the end of 2022, according to Nationwide.
The building society’s latest house price index showed prices rose to 2.1% last month, from 1.5% the month prior.
The index shows an increase in house prices by 0.3% since June considering seasonal effects, although Nationwide’s chief economist Robert Gardner noted that prices remained around 2.8% below the all-time highs recorded in the summer of 2022.
In raw numbers, homes were roughly £270 more expensive in July with the average cost of a home at £266,334, not seasonally adjusted.
Market activity has proved steady, with around 60,000 buyer mortgage approvals per month, which Gardner said was “still a respectable pace given the higher interest rate environment”, despite being around 10% below pre-pandemic levels.
“Investors expect Bank Rate to be lowered modestly in the years ahead, which, if correct, will help to bring down borrowing costs,” Gardner said.
Michelle Stevens from personal finance website finder.com said: ”If the Bank of England follows through with expectations and lowers the base rate in the next couple of months, I’m confident that house prices will continue to see growth in the second half of this year.
”We recently polled a panel of experts, and 70% believe that house prices will rise by up to 2.5% by the end of this year.”
Director of estate agent Benham and Reeves, Marc von Grundherr, indicated that “buyer confidence is high” despite interest rates staying put for now.
He advised: “For those planning to make their move in 2024, now is the time to do so, as buyer demand is only likely to increase when interest rates are finally cut, making it very much a seller’s market at present.”
However Nationwide’s Gardner was less optimistic than others and said the impact of lowered base rates “is likely to be fairly modest” and “affordability is likely to improve only gradually through a combination of wage growth outpacing house price growth (which is expected to remain fairly flat.)”.
Chris Baguley, group channel development director at mortgage provider Together, said “there will still be some who prefer to remain cautious in the short-term and wait for the outcome of the Autumn Budget first” instead of rushing to buy once interest rates have fallen.
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