Housing market stabilises as interest rate cut rumours boost optimism

The housing market shows signs of stabilising ahead of rumours of an anticipated interest rate cut in the summer.

e.surv House Price Index for June reveals the housing market is stabilising after a period of decline due to samp duty changes.

e.surv predicts the housing market will improve in the summer months due to an ease in affordability rules and a potential interest rate cut.

Expectations of interest rate cuts could support demand

According to e.surv’s house price index, the average sale price of a home in England and Wales was broadly unchanged in June at a little below £358,000.

The firm says the modest price erosion seen over recent months appears to have now run its course.

e.surv adds annual price comparisons have not varied a great deal over recent months, with average prices currently 1.3% lower than a year ago.

Rob Owen, head of research at e.surv, predicts the housing market will strengthen through the second half of the year.

He said: “The housing market showed signs of stabilising in June, with average prices in England and Wales holding steady at just under £358,000. This suggests the recent period of modest price decline may be ending.

“Looking ahead, easing mortgage affordability rules and expectations of interest rate cuts could support demand, especially in London and the South. If combined with rising mortgage approvals and improving sentiment, the market could finish 2025 on a stronger note.”

The Bank of England previously kept interest rates the same at 4.25% in June, but there are rumours of a potential cut later this year.

Stamp duty changes stabilising the market

Elsewhere in the report, changes to stamp duty thresholds, initially seen as a blow to buyers, now appear to be stabilising.

In April, stamp duty thresholds in England were lowered. For first-time buyers, the exemption threshold dropped from £425,000 to £300,000, while for standard residential properties, fell from £250,000 to £125,000.

Mr Owens adds: “HMRC data indicates a partial recovery in transactions following the end of the stamp duty holiday. London, which had been a major drag on national figures, made only a minimal negative contribution in May – its best showing in 18 months.”