UK house prices fall more than $5,000 in August

The average price of a new home on the market in the UK fell by more than £5,000 in August compared to the previous month, as prices traditionally fall due to the summer school holidays.

According to property platform Rightmove, the typical price tag for a house across the UK has fallen by 1.5%, or 5,705. The fall has pushed the average listing price up to 367,785.

According to the real estate website, August has been the month with lower prices compared to July for the past 18 years, and this month is in line with the long-term average.

The decline is largely due to the annual slowdown in market activity during school summer vacations, when many potential buyers pause their home search. As a result, sellers who list their homes during this period often set competitive prices to attract a reduced buyer pool.

Read more: This week’s best UK mortgage deals

But this year’s market has shown a unique dynamic. The first Bank of England rate cut in four years, which came into effect in early August, has sparked renewed interest among buyers. Since interest rates were cut from 5.25% to 5%, the highest in 16 years, the number of potential buyers contacting estate agents has jumped by 19% compared to the same period last year, a significant increase from the 11% increase recorded in July.

With buying activity picking up again, Rightmove has revised its forecast upwards for 2024, predicting the average selling price will rise by 1%, compared to a previously forecast 1% decline.

The first bank rate cut since 2020 has sparked a welcome late-summer surge in buyer activity. While mortgage rates have not yet fallen significantly since the cut, the first long-anticipated cut has finally arrived and the fact that mortgage rates are falling is positive for house-moving sentiment, says Tim Bannister, Rightmoves’ head of property science.

For first-time buyers, the average listing price outside of London was $227,191, while for second-time buyers it was $340,605. For those at the top of the ladder, the average listing price was $665,492.

The story continues

London continues to have some of the highest property prices across the UK, with Kensington and Chelsea recording the highest prices.

The market momentum is also reflected in the number of agreed sales, which is 16% higher than when mortgage rates were near their peak a year ago. In addition, the number of new sellers entering the market is up 5% year-over-year, indicating growing confidence among homeowners.

Read more: 9 Real Estate Renovations That Will Make You Stand Out from the Crowd

Mortgage rates have also improved, but only modestly. The average five-year fixed mortgage rate has fallen from 5.82% a year ago to 4.80%. For buyers with a 40% deposit, the best five-year fixed rate is now 3.83%, the lowest since before the September 2022 Mini Budget.

While Bannister acknowledged that mortgage rates remain high by historical standards, he stressed growing optimism among both buyers and sellers.

Bannister said the end of the summer holiday season was creating conditions for a more active fall market. He added that further cuts in bank rates would be needed for mortgage rates to fall significantly, but current market conditions suggest a brighter outlook for the remainder of the year.

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