London (parliament Politics Magazine) – UK home prices have fallen by over £5,000 this month, as the autumn budget triggered concerns in the housing market ahead of the seasonal Christmas slowdown.
According to the UK’s real estate website Rightmove, in November, the average asking price from new sellers fell by £5,366, or 1.4% to £366,592, double the usual 0.8% decline seen at this time of year.
Rightmove analysts are still optimistic despite the drop, hoping that the housing market is busier than a year ago, fueled by improved sentiment following interest rate cuts.
This month the Bank of England reduced the base rate by 0.25% to 4.75%, marking the second cut of the year.
Last month October month saw a 0.3% rise in prices, a smaller increase compared to the typical 1.3% increase for the month.
Rightmove experts predict a 4% rise in asking prices for the coming year 2025 but already warned that the market is still sensitive to price fluctuation, with seller competition at its highest in a decade.
Mortgage costs have risen in recent weeks despite the base rate cuts driven by external factors such as rising swap rates following the budget and the US presidential election. Concerns about inflation and the global economy have assisted to the shift. Interest rates are still predicted to decrease, but analysts expect a more gradual drop to 3.5% by early 2026 rather than the 3% originally expected.
Moneyfacts data reveals that the average two-year fixed mortgage rate has risen to 5.49% as compared to 5.36% in mid-October, but still below the 6.19% recorded this time last year. The average five-year fixed rate stands at 5.22% up from 5.05% in mid-October but is less than the 5.71% rate from last year.
Rightmove’s director of property science, Tim Bannister said, “The big picture of market activity remains positive when compared to the quieter market at this time last year”.
He added, “This sets us up for what we predict will be a stronger 2025 in both prices and number of homes sold, particularly if mortgage rates fall by enough to significantly improve affordability for more of the mass market”.
Rightmove revealed that its data shows a decline in buyer inquiries for estate agents after the autumn budget was later reversed by the rise in buyer demand after the recent Bank of England base rate cut.
However, the Rightmove website still expects the typical seasonal slowdown in home-moving activity as Christmas approaches.
Mr Bannister said, “We now predict that we’ll see a stronger year for prices in 2025. The signs are that the market momentum that we’ve been seeing this year will continue into next year, especially if mortgage rates drop to a level that gives greater affordability to some movers who have been waiting in the wings until now.
He continued, “However, we still expect some twists and turns next year. The speed at which mortgage rates come down next year will be key in determining activity levels for some of the market’s traditionally busiest periods, and sellers will still need to price temptingly enough to secure a buyer while the choice of homes for sale remains as high as it is right now”.
National sales managing director at Leaders Romans Group, Kevin Shaw, said “It’s definitely an interesting time in the market but as we go into 2025 we expect market sentiment to improve further”.
Alastair Cochrane, group sales and operations director at Stirling Ackroyd stated, “Overall yields have increased with rising rents, which should give investors some comfort despite increases in stamp duty”.
The manager at Clarkes Estate and Letting Agency, Alex Caddy said “We have two camps of sellers at the moment – those without time pressure are holding fast with their asking prices, while others who reduce their price to attract a buyer more swiftly have more luck once they find a competitive price point”.
He added, “There are still many sellers planning their moves who are out looking despite not yet having a buyer themselves. There is certainly optimism that as first-time buyer activity picks up, this will create the much-needed knock-on effect to kick-start next year”.