House prices rise in 2023: recovery after lending crisis

The UK housing market is showing signs of recovery two years after a lending crisis triggered by Liz Truss's mini-Budget. Recent data from Rightmove indicates that while mortgage rates are decreasing, sellers are significantly increasing their asking prices, leading to a disparity between average selling prices and the average UK wage. The Halifax house price index reported an average price of £292,505 for August, highlighting this gap. Despite the challenges, sales have increased by 27% compared to a subdued 2023, with buyers taking an average of 60 days to find properties, which is slightly longer than last year. This indicates a more cautious approach from buyers, who are willing to negotiate prices. Sellers must adapt to this new market dynamic to ensure timely sales. The potential for a significant interest rate cut by the US Federal Reserve could influence the Bank of England's Monetary Policy Committee (MPC) decisions. Although Governor Andrew Bailey has stated that the MPC operates independently, central banks often respond similarly to economic conditions. Inflation data, particularly regarding service prices and core inflation, will be crucial in determining future interest rate movements. If inflation falls below expectations, it may prompt the MPC to consider an early cut, which could further impact the housing market and lending rates.