Lower mortgage rates are said to lead to a growth in house prices for the rest of 2024 according to data from Halifax as house prices showed a healthy 0.8% in growth in July - up from the average price of £289,042 recorded in June.
Head of mortgages at Halifax Amanda Byrne mentions this as a “encouraging” factor for those attempting to move up the housing ladder or new buyers
“Recent price rises build on a largely positive summer for the UK housing market.
Against the backdrop of lower mortgage rates and potential further base rate reductions, we anticipate prices to continue a modest upward trend throughout the remainder of this year.”
The Bank of England's recent decision to lower interest rates from 5.25% to 5% marks the first reduction in over four years, signalling a potential shift in the property investment landscape. While the Bank cautions against expectations of further significant cuts in the near future, this move has already begun to ripple through the mortgage market, presenting new opportunities for property investors.
Major lenders have been quick to respond, with Halifax, NatWest, and Santander trimming their mortgage rates by up to 0.20 percentage points. In a particularly noteworthy development, Nationwide, the UK's largest lender, has introduced a sub-4% deal for select new buyers, potentially opening doors for investors looking to expand their portfolios.
The Investors Cut
The property market's reaction has been notably positive. Sam Mitchell, CEO of Purplebricks, observed: "The growing confidence we've seen take hold of the housing market in recent weeks has been supercharged by the BoE's interest rate cut." This sentiment is echoed across the industry, with many investors who had been hesitant now moving forward with purchasing decisions.
For property investors, this rate cut could translate into more favourable borrowing conditions, potentially increasing the viability of new acquisitions or refinancing existing investments. However, it's crucial to remain vigilant and strategic, as the Bank's cautious stance suggests that the broader economic landscape remains complex.
Recent research from the Royal Institution of Chartered Surveyors (RICS) indicates a significant upturn in sentiment within the UK property market. The latest survey results point to the most optimistic outlook for house sales since the onset of the COVID-19 pandemic. A net balance of 30% of property professionals anticipate an increase in sales over the next three months, rather than a decline. This marks the highest level of positive sentiment since January 2020, just before the pandemic took hold. This surge in confidence among property professionals suggests a potential turning point in the UK housing market. The last time expectations were this high was over four years ago, indicating a possible return to pre-pandemic levels of activity. For property investors, this positive shift in market sentiment could signal several opportunities. Increased transaction volumes may lead to more properties becoming available.
Some things to note…
Growing confidence might translate into price stability or even modest growth in some areas. Higher sales activity could result in quicker turnaround times for property flips or renovations.
However, it's crucial to note that this is a forward-looking indicator. While it reflects growing optimism among professionals, actual market conditions may take time to align with these expectations.
