21st Oct 2024 06:33
(Alliance News) - UK home buyer demand "remains strong", though prices this month rose at a softer pace than usual, according to figures from property portal Rightmove PLC.
Average new seller asking prices in October edged up 0.3% to GBP371,958 from GBP370,759 in September, when prices had risen 0.8% from August. Rightmove said the October change was "much lower" than the "average seasonal" 1.3% on-month rise for this month.
On an annual basis, the average asking price in October rose 1.0%, slowing from 1.2% growth the prior month.
Rightmove said the number of sales being agreed in October jumped 29% on-year, "a strong rebound from the weaker market a year ago".
"With a greater choice of properties to consider, buyers are making use of their increased negotiating power, helping to keep price rises subdued," Rightmove commented.
There was a 17% rise in people contacting agents about homes for sale - suggesting that underlying buyer demand "remains strong" - and the number of available properties rose 12% to "the highest per estate agent since 2014, intensifying competition to find affordability-stretched buyers, some of whom may also have pre-budget jitters".
"This month's subdued price growth comes as buyer choice soars to a level not seen since 2014. With the ball in the buyer's court and the pick of a big crop to choose from, sellers need to be pricing competitively to find a buyer, particularly with affordability still very stretched," commented Rightmove analyst Tim Bannister, adding: "We're not seeing activity slow down, but some estate agents report that some movers are now waiting for budget clarity and anticipated cheaper mortgage rates later this year.
"However, others state that movers are largely just getting on with plans."
Rightmove further noted that the average five-year fixed mortgage rate this week is 4.61%, up from 4.55% in the first week-on-week rise since May but "still a big improvement from the average of 6.11% at the peak in July last year".
Going forward, Bannister said: "Despite a budget-shaped cloud on the horizon, the big picture still looks positive for the market heading into 2025...Once we have more certainty about the contents of the Budget, hopefully followed by speedy second and third [Bank of England interest rate] cuts, we could see another surge in market optimism like we had in the summer.
"Affordability is still the biggest barrier facing many movers, with mortgage rates still high, so if the expected two cuts come to fruition it could be the boost that many buyers-in-waiting need. 2025 could see the return of the previously priced out buyer."
The UK budget is announced on October 30.
UK Chancellor Rachel Reeves is said to be considering bringing a stamp duty discount introduced by the Tories to an end, the Times newspaper reported last week.
Under Tory leadership, the threshold for stamp duty on home purchases was lifted to GBP250,000 from GBP125,000. For first time buyers, it rose to GBP425,000 from GBP300,000.
The Times reported that this month's budget will confirm the increased nil rate on stamp duty will end in March. The newspaper reported that this move will raise the government GBP1.8 billion a year by 2029-30.
Bannister said Friday that the rumoured change to stamp duty thresholds "will no doubt be seen as an unwelcome additional cost by many buyers".
"With the threshold for the nil rate, the rate at which no stamp duty is charged for home-movers, due to fall from GBP250,000 to GBP125,000, anyone purchasing a property over this amount could face paying up to GBP2,500 more in stamp duty land tax. Meanwhile, the threshold rate at which first-time buyers do not pay stamp duty is likely to fall from GBP425,000 to GBP300,000. If a first-time buyer buys a property at the average UK price of GBP370,759 they will pay GBP3,538 in stamp duty from March 2025, compared with nothing now," Bannister said.
"First-time buyers are already under considerable financial pressure, with monthly mortgage payments having risen by over 60% in the past five years, adding an extra GBP350 per month on average. Although mortgage rates have eased slightly, they remain high compared to previous years, and house prices continue to increase in many areas."
Bannister said there is likely to be "a rush" to complete deals before any stamp duty changes come to effect.
By Emma Curzon, Alliance News reporter
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