There's a wait-and-see approach in the UK housing market, with a slight dip in asking prices for homes. According to Rightmove, the average asking price for homes listed between June 9th and July 6th was GBP 373,493 (around USD 485,000), marking a 0.4% decrease from the previous month. This year's July decline exceeded the typical 0.2% drop observed in previous Julys. Despite this, asking prices are still 0.4% higher compared to July 2023. Potential buyers are holding off on purchases, anticipating a potential Bank of England interest rate cut, which could improve affordability and market stability.
There's a wait-and-see approach happening in the UK housing market, with a slight dip in asking prices for homes. This trend suggests potential buyers are holding off on purchases in anticipation of a Bank of England (BoE) interest rate cut.
According to property website Rightmove, the average asking price for homes listed between June 9th and July 6th was GBP 373,493 (around USD 485,000). This represents a 0.4% decrease compared to the previous month. While Rightmove's data isn't seasonally adjusted and often sees a dip in July, this year's decline was larger than usual, exceeding the typical 0.2% drop observed in previous Julys.
Looking at a broader picture, asking prices haven't dropped significantly year-on-year. In fact, they're still 0.4% higher compared to July 2023. However, other housing market indicators are showing signs of slowing down. This slowdown coincides with a shift in expectations regarding a potential BoE rate cut. Originally, many anticipated a cut soon, but strong wage growth (data due later this week) and persistent cost pressures have made that less likely. Investors currently assign a roughly 50% chance that the BoE will cut rates on August 1st.
The recent UK election, which saw a landslide victory for Labour led by Keir Starmer, might provide some stability for the housing market. Rightmove believes this political certainty could be positive. However, the potential for a BoE rate cut is still seen as a major turning point.
Tim Bannister, Director of Property Science at Rightmove, noted that the first Bank Rate cut in over four years, combined with the new political certainty, could set the scene for a positive autumn market. He added that improved affordability and a more confident outlook could emerge in the second half of the year, thanks to a potential rate cut.
Affordability has been a key issue leading up to the election, with house prices rising roughly 20% since the last election in December 2019. The newly elected Labour government has pledged to increase housebuilding by an unspecified amount, with a focus on creating more affordable housing options. It remains to be seen how these policies will impact the market in the long run.
While the overall picture is mixed, there might be a window of opportunity for potential buyers in the near future. A wait-and-see approach might prove beneficial, especially if the BoE does decide to cut interest rates in August. This could lead to improved affordability and potentially a more stable market environment. Additionally, the new government's housing policies could potentially influence affordability in the long term.
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