Market Report July 2024 – Election jitters, or long-term issues?

Rental growth appears to be strong, but is still losing momentum. Meanwhile, house prices had another sluggish month. Even so, some estate agents think that the market could pick up now that the election is over.

• It’s been a flat year for house prices, according to the latest Halifax House Price Index. Prices in June were up 1.5% annually, but had fallen 0.2% from May. That put the average house price at £288,455, around £500 below the previous month. Amanda Bryden, Halifax’s Head of Mortgages, said that mortgage affordability is limiting growth.

• Rightmove reports a much higher average asking price of £375,110 in June. However, price growth was essentially flat month to month, with a fall of £21 in cash terms, and prices are just 0.6% higher than they were a year earlier.

• Estate agents were split on whether or not election uncertainty was holding back the housing market, but generally expect things to pick up once interest rates fall later in the year.  

• Speaking of interest rates, the Bank of England’s next opportunity to cut them is 1 August. Inflation has fallen significantly, but one of the Bank’s Monetary Policy Committee’s rate-setters has publicly called on his colleagues to remain cautious. Additionally, the Chief Executive of Lloyds Banking Group, Charlie Nunn, has warned that the “new normal” for interest rates could be significantly higher than it was pre-pandemic: 3.5% to 4.5% instead of 1.5% to 2.5%.

• Average UK rents increased 8.7% in the 12 months to May 2024, according to the Office for National Statistics. Rents increased fastest in Northern Ireland, which hit growth of 10.3%, and slowest in Wales at 8.5%.  

• Private sector reports found slower rental growth. The HomeLet Rental Index reported 5.7% annual rental growth in June 2024, while Rightmove found 7% rental growth outside London and just 4% in the capital. While those are still high figures, both reports found that rental growth is slowing.