Rightmove reverses house price forecast after rate cut

The positive impact of this month’s Bank of England base rate cut, combined with other encouraging market data, has led Rightmove to revise its end-of-year price prediction upwards.

It’s reversed its forecast from a 1% drop in new seller asking prices over the whole of 2024, to a 1% rise.

It says: “We expect small price rises in the autumn, followed by the usual seasonal monthly falls in prices at the end of the year. Though there are still some uncertainties ahead – October’s Budget, the timing of a second Bank rate cut, and the US economy to name just three – the scene is now set for a positive remainder of the year.

“The number of sales being agreed between buyers and sellers continues to track very positively at 16% ahead of last year, and the number of new sellers coming to market is now a stable 5% ahead of this time last year.”

It says it’s been influenced by mortgage rates continuing to head downwards, having picked up some pace in recent weeks.

The average five-year fixed mortgage rate is now 4.80%, which though still high compared with three years ago, before the first of 14 consecutive Bank rate increases, is an improvement from 5.82% at this time in 2023. Rightmove’s weekly mortgage tracker shows that the best available five-year fixed rate is now 3.83% for those with a 40% deposit, the lowest that a five-year fixed rate has been since the period before the mini-Budget in September 2022.

The portal adds: “Although it will likely take a few more cuts to the Bank rate for home-movers to see a more substantial reduction in mortgage rates, it’s home-mover sentiment that has immediately been heightened. Buyers and sellers are more optimistic about the outlook for the market, evidenced by the immediate upturn that we’ve seen in activity.

“However, though optimism around the direction of mortgage rates is justified, the reality is that they are still very high compared with a few years ago, and there will be some who need rates to drop further before their affordability is notably improved. Buyers are still stretched, and so sellers mustn’t get too carried away by the higher buyer activity levels compared with last year, and continue to come to market with a competitive price.”