Market Report September 2024: Autumn bounce incoming?

House price growth appears to be rising after a slow summer, while rental growth may be on the way down. However, a slowdown in construction could mean problems ahead for the housing market.

• Mortgage lenders cut rates to the lowest level in almost two years last month after the Bank of England’s base rate cut. However, the Bank held the base rate at 5% at this month’s Monetary Policy Committee meeting, reducing the chances of further cuts for borrowers.
• Halifax reports that house prices rose 4.3% in the year to August, but says this is partly due to the weak growth seen a year ago as well as increasing buyer optimism. They estimate the average UK house price at £292,505.
• Nationwide reports lower annual growth than Halifax, at 2.4%, and says that house prices actually fell 0.2% month to month. Nevertheless, that growth figure is the highest they’ve reported since December 2022. Nationwide’s average house price is also lower than Halifax’s at £265,375.
• While house prices are rising, Zoopla’s latest Rental Market Report finds that rental growth is slowing down. Rents for new lets rose 5.4% year on year in July 2024, only around half of the figure for July 2023. The average rent stood at £1,245 per month.
• Why is that? Zoopla says rental supply has risen by about a fifth since the same time last year. Demand from tenants is also down – though by no means low yet. With 21 people reportedly competing for each property, there is still some way to go before supply and demand are balanced.
• But the Office for National Statistics (ONS) puts rental growth for July significantly higher than Zoopla, at 8.6% year on year. The ONS also deviates from Natiowide and Halifax in house prices, reporting that price grew by 2.7% in the year to July to reach £288,000.
• Housebuilding is a long way adrift of the government’s 300,000 a year target. Just 31,670 new homes were completed in the first quarter of this year, according to the ONS – less than half of what is needed. Barratt Developments, the UK’s largest housebuilder, said that high interest rates and inflation are putting off buyers – and forecast that it would reduce construction further next year.