Bank Rate Cut Sparks Increased Activity in Property Investment Market: Rightmove
The recent Bank of England rate cut, the first in four years, has spurred a significant increase in buyer activity. Rightmove has responded to this positive shift by revising its 2024 property market forecast from a 1% decline to a 1% increase in new seller asking prices. This change is driven by the latest market data, which shows a promising trend in property investment and buy-to-let sectors.
Seasonal Price Drop: A Common Trend in August
August has traditionally seen a decrease in property prices, and this year is no different. The average asking price for properties coming to market dropped by 1.5% to £367,785. This decline is consistent with the 18-year trend of price reductions during the summer, a time when many potential buyers focus on holidays rather than property investment. Sellers entering the market now may be more motivated to price competitively, reflecting the quieter market conditions.
Bank Rate Cut: A Catalyst for Buy-to-Let and Property Investment
This summer, the property market is seeing a renewed sense of urgency among buyers, likely driven by the recent Bank of England rate cut. The decrease in mortgage rates has significantly boosted buyer demand, setting the stage for a more active autumn market. This optimistic shift has led Rightmove to adjust its 2024 forecast, now expecting a 1% rise in new seller asking prices instead of the previously predicted decline.
Increased Buyer Activity Following Rate Cut
Since the Bank Rate cut on August 1st, there has been a noticeable 19% increase in the number of potential buyers contacting estate agents compared to the same period last year. This surge in interest is a direct result of the improved economic outlook and greater political stability, which are encouraging more people to consider property investment and buy-to-let opportunities.
Mortgage Rates: A Positive Trend for Home-Movers
Mortgage rates are continuing their downward trend, offering some relief to home-movers. The average five-year fixed mortgage rate has decreased to 4.80%, with the best available rates dropping to 3.83% for those with a substantial deposit. Although mortgage rates remain high compared to a few years ago, the recent reductions are fostering optimism among buyers and sellers, leading to increased market activity.
The Future of the Property Market: A Cautious Optimism
Despite the positive impact of the recent rate cut, challenges remain for the property market. The upcoming Budget in October and the potential for further Bank Rate cuts will play crucial roles in shaping the market's future. While current buyer activity is strong, sellers are advised to remain realistic in their pricing to attract buyers still facing affordability challenges.
The Need for Confidence in the Property Investment Sector
Nathan Emerson, CEO of Propertymark, emphasises the importance of confidence in the housing market, particularly after several years of economic disruption. He advocates for further interest rate cuts if inflation continues to fall, as well as government action on planning reforms to support the delivery of new homes. These measures would provide a much-needed boost to the property investment and buy-to-let markets, helping to stabilise and grow the sector in the coming years.
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