House prices continue to decline as interest rate cut eases pressure on buyers

House prices fell in July but interest rate cut offered some relief for first-time buyers, claims e.surv.

The House Price Index for July by e.surv revealed the housing market remained subdued during the summer, but there were signs of a gentle recovery.

E.surv claimed lower interest rates through the second half of the year would help prospective buyers.

Underlying sales activity has begun to improve

According to the House Price Index, the average sale price of a home in England and Wales fell by 0.6% in July, marking the sixth consecutive monthly decline.

The firm said the average sale price was £353,300, 2.2% lower than a year ago.

Rob Owens, head of research at e.surv, said the data showed the housing market was still adjusting to stamp duty changes, which took effect in April this year.

Rob Owens, head of research at e.surv, says the data shows the housing market is still adjusting to stamp duty changes, which took effect in April this year.

He adds: “There are signs that underlying sales activity has begun to improve, although the large number of vendors entering the market has led to prices softening in recent months.”

Further interest rates cuts expected

Despite inflation concerns, the Bank of England announced an interest rate cut to the lowest level in two years to 4%.

Mr Owens said the cut boosted optimism for first-time buyers.

He said: “The base rate cut to 4.0% may offer some relief to borrowers, particularly first-time buyers, but we don’t expect a significant change in mortgage rates in the short term.

“Lender caution and broader market conditions continue to weigh on affordability, especially in higher-priced regions like the South East and London.”

He added with another rumoured interest rate cut this year, this could improve buyer confidence and stabilise the market.

He says: “Nonetheless, rising real incomes and improving sentiment suggest the market may be entering a period of gentle recovery. With further rate cuts expected, the second half of the year could offer a more stable footing.”