August Rate Cut – Seller Boost?

Will the August rate cut be a boost for sellers? 

Sellers will have been happy to see this month’s interest rate cut.  It is the fifth since this time last year when the Monetary Policy Committee (MPC) began cutting the base rate after a long period of stagnation. With interest rates now at 4%, 1.25 percentage points lower than last August’s 5.25%, it’s hoped that buyers will continue to brave the market, elongating a buying rush that started with that first rate cut this time last year.

The announcement should be a welcome boost for the housing market after the Monetary Policy Committee held the base rate at its last meeting. That had followed a surprise jump in inflation to 3.6% for the 12 months to June.

But at its latest meeting, the MPC once again noted caution in its approach, with a second vote required after the committee initially failed to reach a unanimous decision. In the final vote, 5-4 voted in favour of the 0.25 percentage points reduction. Bets remain that the next rate cut will be in November, echoing the pattern of rate cutting seen last year. So, what will this mean for sellers?

Increased confidence from buyers

Sellers needs buyers. The continuation of base rate cuts is attracting more buyers to market. In its July House Price Index, Rightmove revealed that the number of buyers contacting estate agents about properties for sale was up 6% on last year. And it’s not just idle interest, with the number of sales agreed also up, increasing by 5% on the same time last year.

More opting to sell

This positivity from buyers means that sellers are more confident about the prospect of selling their property too, attracting more sellers to list their properties as a result. This increased availability and wider choice also stimulates buyers to act when previously their pool of properties may have been more limited.

Getting the right price

The challenge of the additional availability of properties for sale means that sellers face more competition to conclude a sale than previously. That is impacting asking prices, which saw a 1.2% drop in July, according to Rightmove. Despite the latest base rate cut and lower mortgage rates buyer affordability remains a challenge, especially with the MPC warning of an increase in inflation to 4% in September. Sellers will need to continue to price realistically and competitively to attract buyers in this busier market.

Price growth is stalling

Price growth is stalling longer-term too, with Rightmove reducing its price forecast for 2025 from +4 to +2% for the rest of the year. This makes it even more important that sellers are careful with their pricing. It’s not that the buyers aren’t willing to buy – they just want to do so at the right price.

For advice on selling your home  please get in touch with us today. You can also get a free, instant online valuation of your home to give you an idea of how much your property is worth, by clicking here