Housing Demand Rises After Interest Rate Cut

The UK housing market has seen a notable increase in activity following the Bank of England's recent interest rate cut, according to data from Rightmove. After the Bank reduced rates from 5.25% to 5% for the first time in over four years, estate agents reported a 19% rise in property inquiries in August compared to the same month last year. This uptick follows an 11% increase in inquiries recorded in July, indicating a potential shift in market dynamics. Despite the surge in interest, average asking prices have experienced a slight decline of 1.5% in August, bringing the average price to £367,785. This drop, amounting to £5,708, is attributed to seasonal trends, as sellers often delay moving plans during the summer months. However, on a year-over-year basis, asking prices are still up by 0.8%, a slight increase from the previous month’s 0.4%. Rightmove's analysis suggests that if inflation continues to decrease, the Bank of England may have the opportunity to implement further interest rate cuts, which could further stimulate the housing market. The recent rate reduction has already sparked increased activity, indicating a responsive market. In light of these developments, Rightmove has adjusted its house price forecast for the year, now predicting a 1% increase in prices, reflecting more optimistic market data and trends compared to the subdued conditions experienced earlier in 2023.