What impact will the base rate cut have on property transactions?

The first four months of activity, certainly in our part of the world, have shown some really positive signs.  

There has been a noticeable improvement in sentiment, resulting in increased transactions.  Some year-on-year comparisons from our 5 sales offices show:

• New properties coming to market have increased by 27.6%.
• Exchanged properties have increased by 22.68%.
• The average fall-through rate has dropped by 9% points.  

The rush to beat the stamp duty changes (31st March deadline) may well be over, and as predicted, this had an impact on April activity.  In the rush to get a number of transactions over the line in March, we found that some planned April transactions were subsequently delayed.  Couple this with the Easter school holidays, and April felt a little awkward in comparison.   As we proceed through May, the increased Stamp Duty doesn’t appear to be deterring people and confidence continues to rise. 

From the above stats, what is very reassuring, and a real metric of increased confidence, is the noticeable differential in fall-through rates.  For two consecutive months, the average has been at its lowest for well over 36 months.

The base rate cut last Thursday is welcome news for those looking to purchase a home.  Richard Donnell, Executive Director at Zoopla, commented: “It will provide a boost to market sentiment and filter slowly into lower mortgage rates.  This, alongside reforms to mortgage regulations announced recently, will help boost buying power.”   We anticipate the rate reduction will also give people confidence in the upper market, £1m plus, which has been a little slower of late.  

Stock levels are at their highest for a decade.  According to Zoopla’s April House Price Index: “There were 15% more homes listed for sale in the last month compared to a year ago. The average estate agent currently has 34 homes for sale, compared to 31 this time last year and a low of 15 in 2022 during the pandemic boom.”   They go on to add, “Many of these sellers are also buyers, which explains why sales agreed continue to increase.”   Our advice to any would be seller, if you want to attract a buyer in today’s market, you need to price wisely and then be motivated to respond to immediate market feedback.    

Undoubtedly, affordability continues to be an issue.  There are some amazing mortgage products available and securing a mortgage is becoming easier too.   Our trusted mortgage partners, The Surrey Mortgage Company, quoted rates last week: 
“The lowest rate we could get is 3.87% for a 2 year fixed. This is with a 40% deposit for someone buying a new home. (different rates for those remortgaging).”   

However, if a buyer can’t afford the monthly repayments, then it’s a non-starter.  The appetite to buy and sell is ever present.  The 2025 market is showing signs of a clear difference between new seller aspirations and a buyer’s willingness to commit to the asking price.  Pricing a property for today’s buyers is key.   With an uptick in competition from other available properties, it has never been more important for a motivated seller to listen to the advice of a pragmatic agent if they wish to secure a buyer.  

As always, we are on hand to offer any help or advice, simply contact your nearest branch.  

Sources:
https://propertyindustryeye.com/property-industry-reacts-to-bank-of-englands-decision-to-cut-interest-rates-4/
https://www.zoopla.co.uk/discover/property-news/house-price-index/