Estate agents’ books fill up as mortgage rates fall

Estate agents have more homes on their books than at any point in the past decade, which is keeping a lid on house prices.
On average, estate agent branches in Britain have 63 homes they are marketing, a 12 per cent increase on this time last year and the most since 2014, data from Rightmove, the property search website, shows.
At the height of the pandemic’s “race for space”, branches would be lucky if they had 40 homes for sale at any one point. That shortage of stock, coupled with booming demand fuelled by the stamp-duty holidays, is what pushed house prices up to record highs.
Rightmove said that the increased choice was helping to increase would-be buyers’ negotiating power and preventing house prices from rising as quickly as some had expected.
The average asking price of a new home being listed on Rightmove has risen by 0.3 per cent over the past month to £371,958. That is much lower than the 1.3 per cent month-on-month increase typically seen in October, which is often a busy time of year for the housing market as would-be buyers resume their searches after the school holidays.
“This month’s subdued price growth comes as buyer choice soars to a level not seen since 2014,” Tim Bannister, head of property data at Rightmove, said. “With the ball in the buyer’s court and the pick of a big crop to choose from, sellers need to be pricing competitively to find a buyer, particularly with affordability still very stretched.”
That more homes are being put up for sale is a reflection of buyers, who usually need to sell their current homes as well, being lured back to the market by cheaper mortgage rates. The average five-year fixed mortgage rate stands at 4.6 per cent, down from a peak of 6.1 per cent in July 2023.
Rightmove’s data shows that the number of sales being agreed is up 29 per cent on this time last year, while estate agents are fielding 17 per cent more inquiries from prospective buyers.
These are the latest data to point to an improving housing market after a two-year downturn, during which a rapid rise in mortgage rates forced people to delay their moving plans. Housebuilders said recently that they are selling more homes, estate agents are growing increasingly optimistic about the outlook for their businesses and house prices are closing in on the highs they reached in the summer of 2022.
Rightmove estimates that asking prices have risen by 1 per cent over the past year, with “second-stepper” homes — three-bed houses, for example — gaining the most in price, up by 1.7 per cent year-on-year.
However, “top-of-the-ladder” homes, which Rightmove defines as five-bed homes and four-bed detached houses, have decreased in value by 0.2 per cent. Bannister said that some potential movers were “waiting for budget clarity” before committing to move.
He is still predicting “an active 2025”: interest rates are due to come down further and wage growth is outpacing house-price inflation, which is improving affordability.
“Once we have more certainty about the contents of the budget [on October 30), hopefully followed by speedy second and third bank-rate cuts, we could see another surge in market optimism like we had in the summer,” Bannister said.