Historically, the August housing market has consistently been a slow decline from July over the last 18 years, which is consistent with the long-term average. This annual decrease from July to August is due to a slowdown in market activity during the summer holidays as many people who would be looking for a new house would rather spend their money on a summer holiday. This results in a more competitive market as sellers will start to price a little lower during this lull.
However, there has been a shift in market dynamics this summer. Due to the Bank of England shifting rates down from 5.25% to 5% for the first time in four years, this has generated a surge in buyer interest, with the number of potential buyers contacting estate agents for purchase up to 19%, compared to last year. This is further corroborated by an increase of potential sales of 11%, up from what we saw just in July.
In response to this uptick of buyer interest in the housing market this summer, Rightmove have adjusted their 2024 forecast, predicting a 1% increase in average asking prices. This has reversed their expectation of a 1% decline and reflects the positive impact the Bank of England rate cuts on market sentiment over the coming months.
These cuts have allowed the market to gain a renewed momentum which is evident in the increase in agreed sales already. These are 16% higher than during the peak mortgage rate one year ago, and the number of new sellers entering the market has risen 5% year on year.
In a significant boost to the UK housing market, Blackstone have sold 3000 homes to Universities Superannuation Scheme (USS) for £405m, creating the largest affordable housing deal in the UK (MSCI). This sale is part of Blackstones broader UK residential portfolio that includes approximately 20,000 homes and represents the second largest residential transaction in the UK this year.
Properties acquired by the USS contribute to the Sparrow Shared Ownership, which is a new social housing initiative aimed at addressing the UK’s chronic housing undersupply, and will go a long ay in providing an affordable pathway to home ownership that the UK has been severely lacking. These shared ownership schemes are designed to help individuals who cannot afford a full property purchase. Whilst critics may highlight the fact that it brings the challenge of increasing ownership shares over time, the deal aligns with the Labour governments emphasis on private investment in housing, and works towards the target they have set of building 30,000 homes annually. This transaction is seen as a pivotal step in achieving this goal.
Comments