Today’s decision by the Bank of England to hold interest rates offers a moment of stability for the property market, easing immediate pressure on buyers, sellers and agents alike.
Commenting on the announcement, Kevin Shaw, National Sales Managing Director at LRG said:
"Today’s decision to hold interest rates is the news many buyers, sellers and agents were hoping for. It does not remove uncertainty from the market, but it does remove an immediate threat.
The Bank had a difficult decision to make against an unusually unsettled backdrop. The on-off ceasefire in Iran is changing by the day and the interest rate outlook has turned turtle in a remarkably short period: just two months ago we expected two interest rate cuts; since the war in the Middle East began, two rises over the course of the year appeared a likely scenario.
The important point is that the situation looks less fragile than a month ago. Assuming the Middle East situation does not escalate, today’s hold suggests some easing of concern around the path of rates for the rest of the year. The fears of further rises being discussed in early March now feel less certain.
From LRG’s perspective, the property market has remained resilient. Buyer activity and sales held up well throughout April, instructions are 5% higher and we are continuing to see momentum despite the wider uncertainty. Today’s decision should help sustain that confidence.
That said, the risk remains. The next Monetary Policy Committee meetings on 18 June and 30 July now become particularly significant. Much will depend on inflation, employment and whether global events continue to feed through into energy prices and household costs.
The concern is that a rise later in June or July could coincide with the market entering its quieter summer season. As property professionals heave a sigh of relief today, they must also think ahead to how a future rise will impact. But for now, a hold gives the market room to keep moving."
Interest Rates Hold Gives the Market Breathing Space
