Interest rate rises ‘driving the market’ as selle...

Interest rate rises are driving an increase in homes for sale, research claims.

National estate agency Jackson-Stops has analysed Rightmove data and conducted a national poll of active home movers across the UK to reveal that interest rates are driving an increase of homes for sale across the market.

The brand surveyed 500 UK adults who either have their home on the market right now, had sold in the past three months, or were planning to move within the next three months.

The sample size is based on a proportional equivalent to 2,000 of the total UK population, which in this instance is 500 of the total average of 350,000 households moving home a year.

Following the Bank of England’s decision to raise interest rates to 2.25% last week, the latest analysis from Jackson-Stops’ survey found that 61% of current UK property sellers have cited rising interest rates as a top motivator for deciding to put their home on the market now.

As a result, 48% of active home movers believe that they would achieve the best possible sale price for their home by selling this year instead of next.

Three-quarters of respondents said borrowing rates were either crucial or important to their move, either reducing their budget for their onward purchase or stopping their move altogether.

Jackson-Stops highlighted Rightmove data showing that the number of homes for sale on the portal is 9.6% higher than a month ago, while the property website’s latest House Price Index shows listings are up 16% annually.

There were regional and generational variations in the research.

Survey respondents in the West Midlands [55%] were the most motivated by rising interest rates when choosing to list their homes on the market, whilst sellers in the South East were least concerned, with more than a third of respondents [36%] motivated by other factors beyond financial pressures.

Sellers in the the South West [34%] and Wales [46%] were most convinced that listing their home on the market now would help them achieve the best possible value.

No respondents in the South West disagreed that they would achieve the best possible price for their home by selling now.

Jackson-Stops said the South West counties of Devon, Dorset, and Cornwall have registered the largest increases in stock this summer.

Ben Standen, director at Jackson Stops Truro, said listings have doubled since May, keeping up with rising demand.

He added: “In the past few weeks, more sellers have chosen to list their home in the belief that house prices nor buyer demand can sustain through to next year in the face of higher interest rates and a tighter borrowing climate. Interestingly however, as demand remains high especially with cash buyers, this has had little impact on sold prices being achieved.

“Cornwall’s perfect mix of historic towns, undulating countryside and waterside living, continues to make it a haven for lifestyle buyers since the pandemic. The coast always rides the wave of a hot market and is often immune from wider house price changes.”

Much of the rush to beat rate rises is coming from younger generations though.

Two-thirds [63%] of those aged over-65’s cited that financial pressures, such as interest rates, high inflation and the cost-of-living, have no impact on their decision to move house at present.

This is reflective of the 74% of people aged over-65 who own their home outright, with just 4.6% of this age bracket still paying off a mortgage, Jackson-Stops said.

Nick Leeming, chairman of Jackson-Stops, said: “Our latest survey shows that interest rates are a driving force in the housing market.

“This is causing many to act now, with sellers taking advantage of both the increased buyer pool as many race to lock in more favourable mortgage rates, as well as the current period of sustained positive house price growth ahead of a more stable market next year.”

“Our survey results show that 35-44 year olds are driving this uptick in listings, in a likely move to secure a larger family home with a fixed-rate deal ahead of further predicted rate rises.

“This in turn is helping replenish stock to more normal levels, which should help fluidity across all levels of the market in their bid to find a suitable onward purchase – one of lockdown’s lasting legacies that made many hesitant to list their home altogether. After a sustained period of short supply and record high demand since the pandemic, more choice for movers is reassuring.”

Leeming said home movers should also be buoyed by the additional saving on Stamp Duty announced in the Chancellors min-Budget last week, adding: “This shift in monetary policy adds a renewed enthusiasm to current transactions, especially those caught in chains, whilst lenders cope with a backlog of applications.

“The long-term effects of interest rate rises on the wider economy might be delayed, however, with around 75% of current mortgages on a fixed rate of between two and five years.”