One month after the Bank of England lowered interest rates to 4.5% the market is already showing signs of a recovery, according to the latest figures from the National Association of Estate Agents (NAEA).

Recent figures from Rightmove and RICS also show consumer confidence returning after last month’s BoE decision to cut rates by a quarter point.

With July’s rate decrease being the first in over two years, consumer confidence is now rising again, said NAEA. Both the number of buyers and the number of sales were up in August. The number of houses on estate agent’s books also increased as sellers regained confidence in the market.

However, the estate agents' association said the interest rate cut had so far not been able to help the many first time buyers who were still trying to get on the housing ladder.

According to their figures, the percentage of first timers fell slightly in August from 7.8% in July to 7.7%. This is down nearly 20% on the same time last year when first time buyers had a 9.6% share of the market.

The NAEA hopes to see an improvement in these figures going forward once the full impact of the rate reduction takes hold. However, further rate decreases may be necessary to help first timers in the near future, it said.

Signs of recovery in the market

Agents reported that the number of house buyers on their books rose 4.6% in August, from 350 to 366 per agent, demonstrating renewed consumer confidence as the holiday period reached its peak.

Sellers also demonstrated increased confidence as the number of new instructions rose 3.7% from 13.6 to 14.1, with the number of houses available increasing 40%, from 55 to 77 per agent. The 2005 housing stock figures were also up on the same time last year, when an average of 61.4 houses were available per agent, in a further sign that consumer confidence is returning to more normal levels.

The number of sales agreed increased by 10% between July and August, from 10 sales per agent to 11. With sales figures now at similar levels to those of August last year – when agents reported an average of 10.7 sales – it seems that the market is indeed getting back on track, the estate agents’ body said.