UK home sellers cut asking prices for the first time in 2024

LONDON - Britain’s home sellers cut the prices they are asking for properties for the first time in 2024 as uncertainty around the election and stubbornly high mortgage rates held back confidence.

Property website Rightmove said on July 15 that the average asking prices by sellers fell 0.4 per cent in July to £373,493 (S$651,000), the first drop since December.

With interest rates stuck at a 16-year high and Bank of England (BOE) officials warning about lingering signs of inflation, a budding recovery in house prices ran out of steam in the past few months. A snap election that culminated on July 4 may have also made many home movers more cautious.

Mortgage rates have crept higher since January as the BOE pushed back plans to cut interest rates. While traders put the odds of a reduction in August near 50/50, they are expecting a more gradual loosening by the central bank than at the start of 2024.

Rightmove’s director of property science Tim Bannister said that the first rate cut since the start of the pandemic and political certainty following the election “could set the scene for a positive autumn market”.

“A base rate cut is expected to lead to lower mortgage rates, which could be the game changer for some would-be home movers who are being held back by significantly higher monthly mortgage costs,” he said.

Despite the dip in asking prices, home sales were still up 15 per cent from a year earlier, when mortgage costs were around their peak.

While mortgage rates are lower than the 15-year high hit a year ago, they remain at painfully high levels for home buyers. Data from Moneyfacts shows that the average two-year fixed mortgage rate has crept up from around 5.5 per cent in January to 5.92 per cent.

The high borrowing costs are leading to more home owners defaulting on their mortgages. Data from the Bank of England on July 11 showed that banks expect default rates to rise in the third quarter by the most in a year. BLOOMBERG