The average price of a home in the UK has fallen by £5,000 in November
Analysts say the market is still quite active, even though it dropped by 1.4%, which is higher than usual for this time of year.
The average asking price for a home in the UK has fallen by more than £5,000 this month, as the autumn budget caused some worries in the housing market before the usual slowdown in December.
The average asking price from new sellers dropped by £5,366, or 1.4%, to £366,592 in November, compared to the usual 0.8% drop at this time of year, according to the website Rightmove.
Despite this drop, Rightmove’s experts are still hopeful because the housing market is busier than last year. This is partly due to the recent interest rate cuts. The Bank of England lowered the base rate this month by 0.25% to 4.75%, the second cut this year.
However, even with these rate cuts, mortgage costs have gone up slightly in recent weeks because of other factors. Swap rates, which are the rates at which banks lend to each other, increased after the budget and the US presidential election, mainly due to concerns about inflation and the global economy. Interest rates are still expected to drop, but not as much or as quickly as previously thought, with experts now predicting a reduction to about 3.5% by early 2026 instead of 3%.
The average two-year fixed mortgage rate is now 5.49%, up from 5.36% in mid-October, but still lower than the 6.19% rate a year ago, according to Moneyfacts. The average five-year fixed rate is now 5.22%, up from 5.05% in mid-October, but still lower than last year’s 5.71%.
Despite this, property sales are still 26% higher than at this time in 2023, and the number of new sellers putting their homes on the market is 6% higher than last year, according to Rightmove.
Rightmove predicts that average asking prices for new homes will rise by 4% in 2025, the highest increase expected since 2021. This is due to the possibility of lower mortgage rates, which could release some of the pent-up demand and push prices slightly higher.
Tim Bannister, Rightmove’s property expert, said: “We had seen a drop in buyer demand before and after the budget, when it was confirmed that stamp duty charges would increase for most homebuyers, second-home buyers, and some first-time buyers.”
However, if we look at the bigger picture, the market is still doing well compared to the slower market last year, according to Bannister. “This puts us in a good position for a stronger 2025, with higher prices and more homes being sold, especially if mortgage rates drop enough to make homes more affordable for more people.”
Published: 18th November 2024
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