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Private rent and house prices, UK: September 2024: "Falling mortgage rates are definitely driving demand"

ended 18. September 2024

The Office for National Statistics has just published data showing that average UK house prices increased by 2.2% to £290,000 in the 12 months to July 2024 (provisional estimate); this annual growth rate is down from 2.7% in the 12 months to June 2024. Average house prices increased in England to £306,000 (1.6%), in Wales to £218,000 (2.0%), and in Scotland to £199,000 (6.0%), in the 12 months to July 2024. It also revealed that average UK private rents increased by 8.4% in the 12 months to August 2024, down from 8.6% in the 12 months to July 2024. Newspage asked property and mortgage experts for their views, below.

7 responses from the Newspage community

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Andrew Montlake
Managing Director at Coreco
It wasn't so long ago that some were declaring double-digit price falls for the residential property market. That simply hasn't happened and was never going to happen. Prices have held their own and, with mortgage rates continuing to drop, increased demand is likely to send prices higher in the closing stages of 2024. Yes, there are potential road bumps ahead, not least the Autumn Budget, but another base rate cut before the year is out is possible, although it is unlikely to come this week following inflation staying at its current level. Falling mortgage rates are definitely driving demand on the ground.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
Considering the volatility we've had this year, and in previous years not least due to the mini-Budget, the housing market has shown its mettle. Mortgage rates have been falling consistently in recent months and this is really starting to stimulate demand. We're expecting a strong final quarter to the year as people make the most of the more compeittive rates now available.
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Gabriel McKeown
Head of Macroeconomics at The Sad Rabbit Newsletter
In a surprising twist, the UK housing market is showing signs of divergence, with house prices showing signs of cooling while the rental market continues to surge ahead. Despite a combination of competitive mortgage products and the potential for further interest rate cuts, this slight deceleration suggests that the post-pandemic housing boom may be finally running out of steam. However, while homeowners may be breathing a sigh of relief at the moderating price growth, tenants are finding little respite. This continued strength in the rental market can be attributed to a perfect storm of factors, with a squeeze on mortgage affordability pushing potential buyers into renting. Furthermore, as Chancellor Reeves sharpens her fiscal scalpel with landlords on the cutting block, a mass exodus from the rental market has already begun. Against this backdrop, the impact could be devastating, with the cost-of-living crisis making it harder to save for deposits, trapping many in a rental spiral.
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Patricia McGirr
Founder at Repossession Rescue Network
A 2.2% increase is hardly an attention grabbing headline and it’s hard to see many homeowners upsizing on the basis of their ‘gains.’ Meanwhile, renters facing an 8.4% rise, might as well come with a complimentary ‘stay at mum and dad’s’ package. Scotland might well do a jig a 6% house price surge, but for the rest of us? It’s looking more like ‘generation permanently-grounded.’

Forget flying the nest, that spare room is now permanently reserved for the offspring. The UK’s housing market has turned into a long-term family reunion. If this keeps up, we’ll need a reality show called ‘Escape from Mum and Dad’s,’ because having a place of your own is fast becoming an impossible dream.
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Iain Swatton
Director at Exemplar Financial Services
Rents are finally showing signs of cooling off, even in hot spots like London, with growth slowing from 8.6% to 8.4%. This stabilisation, along with a slower rise in house prices, suggests the market is starting to balance out. While challenges remain, it’s encouraging to see signs of relief for both renters and buyers, signaling a more positive outlook for the housing and rental sectors. That said, with today’s inflation announcement, an interest rate cut may not be on the cards just yet, but the market is moving in the right direction.
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Darryl Dhoffer
Founder at The Mortgage Geezer
The slowing in the annual rate of price growth suggests that the property market is starting to stabilise. Given the instability in the economy, that's perfectly understandable. Don't expect fireworks this year given the looming Autumn Budget, an economy that is flatlining and sticky inflation. But equally, don't expect prices to nosedive. The market is likely to rumble along for now until we get that next base rate cut, which is unlikely to be this week and may not even be this year.
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Mark Eaton
COO at April Mortgages
Despite the slight dip in the annual rate of growth, the property market has continued to show its resilience throughout 2024. Given the political and economic volatility, that is no mean feat. The upcoming Autumn Budget may well prove to be another test for the market. After two years of market volatility, many borrowers are questioning whether they want to face rate fluctuations every few years. Longer term fixed rates offer protection against economic uncertainty, providing peace of mind and flexibility in financial management, especially important as mortgages are often the largest monthly expense.