Average Asking Price for UK Homes Drops by £5,000 in November
The UK housing market has experienced a notable shift this November, with the average asking price for homes dropping by more than £5,000. This decline, attributed to market jitters following the autumn budget, comes ahead of the typical seasonal slowdown associated with the Christmas period.
According to data from Rightmove, the average asking price from new sellers fell by £5,366, or 1.4%, bringing the average price to £366,592. This decline is more pronounced than the usual 0.8% decrease typically observed at this time of year, indicating a more significant shift in market dynamics.
Market Activity Remains Robust
Despite the drop in asking prices, analysts from Rightmove remain optimistic about the housing market's overall activity. They note that the market is busier compared to the same period last year, buoyed by improved sentiment following recent interest rate cuts. The Bank of England reduced the base rate for the second time this year, bringing it down by another quarter point to 4.75%.
However, the impact of these rate cuts has been somewhat muted, as mortgage costs have risen in recent weeks due to external factors. Swap rates, which influence the rates at which banks lend to each other, have increased following the recent budget announcement and the uncertainty surrounding the upcoming US presidential election. While interest rates are still expected to decline, analysts now predict a reduction to around 3.5% by early 2026, rather than the previously anticipated 3%.
Mortgage Rates and Affordability
Current mortgage rates reflect this complex landscape. The average two-year fixed mortgage rate has risen to 5.49%, up from 5.36% in mid-October, although it remains lower than the 6.19% recorded at the same time last year. Similarly, the average five-year fixed rate has increased to 5.22%, up from 5.05% in mid-October, but still below the 5.71% available a year ago.
Despite these rising costs, the number of property sales being agreed upon is still 26% higher than during the quieter market of 2023. Additionally, the number of new sellers entering the market has increased by 6% compared to the same period last year, indicating a resilient demand for housing.
Future Predictions
Looking ahead, Rightmove forecasts that average asking prices for new sellers will rise by 4% in 2025, marking the highest prediction since 2021. This anticipated increase is expected to be driven by the prospect of lower mortgage rates, which could release pent-up demand and exert modest upward pressure on prices.
Tim Bannister, Rightmove’s director of property science, acknowledged the recent drop in buyer demand, particularly in the lead-up to the budget and its immediate aftermath, which included an increase in stamp duty charges for most home movers and second-home buyers. However, he emphasized that when considering the broader market trends, the outlook remains positive compared to the quieter market conditions of the previous year.
Bannister stated, “This sets us up for what we predict will be a stronger 2025 in both prices and the number of homes sold, particularly if mortgage rates fall by enough to significantly improve affordability for more of the mass market.”
In summary, while the average asking price for UK homes has seen a notable decline this November, the overall market activity remains robust. With predictions of rising prices in the coming year and a continued increase in property sales, the housing market appears to be navigating its challenges with resilience. As interest rates evolve, the potential for improved affordability could further stimulate demand, setting the stage for a more dynamic housing market in 2025.
