In August, the average sale price of a home in England and Wales was just over £356,000 - nearly £1,800 or 0.5% lower than the July average.
On an annual basis, average prices in August were about 2.6% lower than a year ago, as Figure 1 shows. While this represents a modest improvement on where we were in late 2023, prices have yet to move onto a more convincingly upbeat trajectory.
Prices for England and Wales as a whole remain about 6% below the previous peak reached in October 2022.
It is worth noting that our e.surv index paints a slightly more subdued picture of market conditions than some other leading indices (see Figure 2). A small part of the discrepancy lies in the fact that e.surv’s index relates to England and Wales rather than the whole of the UK, and therefore does not reflect the stronger market conditions witnessed in Scotland and Northern Ireland. More generally, recovery of the housing market to date is more evident in lower-priced areas and this may be weighted differently across the different indices.
Discrepancies between different house price metrics are by no means unusual, and the more important underlying message common to them all is that the housing market remains in fairly subdued territory.
At the start of August the Monetary Policy Committee of the Bank of England voted narrowly in favour of cutting the bank rate by 0.25% and this in conjunction with continued rate reductions by mortgage lenders has brought the cost of borrowing down compared to a few months ago.
And, with prices still falling in most areas, it has created a window of opportunity for households to enter the market. In July the RICS housing market sentiment report indicated that new buyer enquiries were rising and though the August holiday period has a dampening effect we would expect that picture to continue and that sales would start to rise reflecting that. Mortgage approvals, another early indicator of market activity, were up in July and the highest for almost 2 years.
At the start of August the Monetary Policy Committee of the Bank of England voted narrowly in favour of cutting the bank rate by 0.25% and this in conjunction with continued rate reductions by mortgage lenders has brought the cost of borrowing down compared to a few months ago.
And, with prices still falling in most areas, it has created a window of opportunity for households to enter the market. In July the RICS housing market sentiment report indicated that new buyer enquiries were rising and though the August holiday period has a dampening effect we would expect that picture to continue and that sales would start to rise reflecting that. Mortgage approvals, another early indicator of market activity, were up in July and the highest for almost 2 years.
Richard Sexton, Director at e.surv, comments:
“Our analysis this month shows that in August, the average sale price of a home in England and Wales was just over £356,000 - nearly £1,800 or 0.5% lower than the July average.
The England & Wales data, which include cash purchases, illustrate that while the base rate cut in August was welcome, it has not transformed the picture for those wanting to move home. Affordability remains an issue for many potential buyers still adjusting to mortgage rates now based on expectations of slower Bank of England interest rate cuts.
When the market sees another cut in due course we should expect that to feed into buyer confidence and increase the downward pressure on mortgage rates and, as importantly, ease lenders’ mortgage stress tests.
The government’s commitment to new housing is welcome but the supply of stock remains tight and this will be the case for some time yet. The lack of supply will support the prices of the right kind of property, lifting averages more generally.
Looking forward, we should expect the prices to pick up. Buyer registrations are growing and we should also expect borrowing rates to improve. Lower interest rates will we think further support house prices over the coming months and hopefully be enough to offset any potential headwinds buyers may encounter in October’s budget.”
