House prices fell by -0.2% in August, taking annual growth to 2.4%, according to Nationwide. Despite the slight month on month fall, this represents the strongest annual house price growth since December 2022 and the fourth month of consecutive annual house price growth. 

Mortgage approvals in July were the highest since September 2022. Greater certainty post-election is allowing pent up demand from potential buyers to unwind. The number of mortgage approvals was 26% higher in July 2024 compared to July 2023, but is still 7% lower than the July 2017-19 average. 

Leading indicators suggest that both demand and supply remain positive as we approach the end of summer. New sales instructions were up 7% in August compared to the 2017-19 average for the month, while sales agreed were up 4%, according to TwentyCi. This combination of rising demand metrics points to greater levels of activity in future.

Activity has been supported by falling mortgage rates. Lending rates had been trending down in the lead-up to the much anticipated cut to the base rate that occurred at the start of August. These falling rates have helped support activity, and are likely the starting pistol for the beginning of a new interest rate cycle. Oxford Economics expect a 25bps rate cut in November. Strong GDP growth and consumer demand mean it is not a foregone conclusion that rates will fall quickly, however, as core inflation remains stubbornly above target. The Budget in October will help provide further clarity on fiscal policy and longer-term expectations in the economy.

Falling mortgage rates will support the market by boosting confidence and easing affordability. The reduction in interest rates is expected to be slower than the increases that occurred in 2022/23. This means that rate cuts may drive confidence more quickly than materially changing household purchasing power. The extent of affordability stress in different parts of the country will continue to influence value growth and activity.

The more lagged Land Registry data highlights regional market differences in the last year. The biggest falls were in the south east of England, including Canterbury (-9.3%), Dover (-8.7%) and Thanet (-7.2%). Lower value markets in the north of England and Scotland saw the highest annual growth, including Inverclyde (12.1%), North Ayrshire (6.5%), and Hartlepool (5.5%).