The latest Halifax House Price Index reveals that house prices fell by 0.2% in June, with an annual increase of 1.6% and a slight rise of just 0.4% since the start of 2024. The average house price now stands at £288,455, marking a decrease of £476 over the month. The North West of England saw the strongest growth with a 3.8% increase, while prices in Eastern England dropped by 0.9%.
Housing Market Faces Stagnation
Sarah Coles, head of personal finance at Hargreaves Lansdown, commented on the current market trends: “The property market is likely to be near the top of the government’s agenda in the coming weeks – and not just the removal van at Number 10. However, it isn’t going to make much of a difference in the short-term. House prices and sales have been tepid for most of 2024 so far, and they don’t look likely to warm up any time soon.”
She further explained the challenges facing the market, citing a lack of demand driven by high mortgage rates and soaring house prices, which have priced many buyers out of the market. “During the election campaign, there was plenty of talk of stimulating the demand side, but not from Labour. Aside from guaranteeing mortgages for buyers with smaller deposits, it is committed to tackling the supply side of the equation instead. It promised to get stuck into reforming the property market and the planning system, as soon as its collective feet are under the desk in Number 10, but we know this is likely to be a gradual and tortuous process,” she added.
Potential Relief from Mortgage Rate Cuts
Looking ahead, Coles suggested that lower mortgage rates might reinvigorate buyer interest, but significant rate cuts aren’t expected in the near term. “The Bank of England is expected to cut rates in August or September, but we’re only expecting a couple of cuts this year, and even after that, the Bank is modelling very gradual cuts in the coming years. By the middle of 2026, it says the bank rate may still be at 4%. It means anyone holding out hope for ultra-low rates could be disappointed.”
For those potential buyers currently unable to enter the market, Coles advised making the most of their savings: “Would-be buyers who are sitting on a deposit, and can’t buy right now, are likely to be desperately frustrated. And while there’s little they can do but sit and wait, they can at least make sure their deposit is working as hard as possible in a competitive easy access savings account. There are still a handful of savings accounts and cash ISAs hanging on above 5% right now, and with inflation back at target, it means your cash can be growing well ahead of rising prices.”
Market Sentiment Amid Election Impact
In response to the Halifax report, Nathan Emerson, CEO of Propertymark, offered an optimistic outlook: “The announcement of a general election last month may have caused movement in the housing market to slow down, but now that we know we have a new government with an overall working majority, Propertymark remains optimistic that house prices will start to rise during the summer months, which is a naturally busy time for the housing market.”
Emerson also emphasised the importance of clear housing policies from the new government and the potential positive impact of an anticipated interest rate cut: “Beforehand, it would be good for the new UK Government to clarify what its housing policies are going to be quickly, and a rumoured interest rate cut from the Bank of England hopefully becoming a reality in August would help trigger a substantial amount of confidence in the housing sector yet again.”
Adding to the conversation, Liz Edwards, a money expert at personal finance site Finder.com, remarked on the market’s current struggle: “The housing market appears to be struggling to bounce back, as today’s figures show that prices cooled last month. Late May saw the announcement of the general election, and it appears that this may have hindered the housing market, as potential buyers wait to see how the results might impact the economy. Many buyers are also still patiently waiting for the base rate to finally come down before they commit to purchasing a property.”
Edwards anticipates a gradual recovery: “It’s likely that we could continue to see house prices sit on the cooler side until buyers can be confident of more stability in the market. I’m hopeful that this will come in the next couple of months as uncertainty from the election passes and the Bank of England finally brings the base rate down.”
As UK landlords navigate these fluctuating conditions, the broader implications for the housing market remain uncertain, but a watchful eye on government policies and interest rates will be crucial in the months ahead.
