This morning the Bank of England’s inflation target is still frozen at two per cent. With property industry bosses saying the new Labour government have inherited ‘favourable’ conditions.
At the end of May UK inflation fell to 2.3% – just above the target of 2% – the lowest level in almost three years. The May dip sparked optimism across the property sector, with industry leaders expressing cautious hope for future interest rate cuts and improved market conditions.
In the lead up to the election the Bank of England voted to hold the base rate once again, prompting comments that it’s time for the Bank of England to ‘pull it’s finger out’.
Inflation has now reached the two per cent target and Propertymark’s CEO has said that a further drop would have been ‘welcomed by consumers’.
Nick Hale, Chief Executive Officer at Movera, a group of home moving businesses including ONP Solicitors, commented: “Inflation stalling at the Bank of England’s 2% target is still positive news for the housing market. Labour have inherited very favourable conditions with this lower level of inflation and this stability could even be enough to force the Bank of England to lower the base rate next month.
“It raises two questions: had Rishi Sunak held off on calling the election and waited for these conditions, would it have been such a landslide victory for Labour? And can Labour now harness these conditions to make the changes the sputtering housing market so desperately needs?”
Nathan Emerson, CEO of Propertymark, comments:
“The positive news from today’s figures is that inflation remains in line with the Bank of England’s target of two per cent, which means that consumers should not continue to witness the price rises we saw across 2022 and 2023.
“Although a further drop in inflation today would have been welcome by consumers, Propertymark is keen to see the Bank of England consider a dip in interest rates as soon as sensible. When the pathway to lower interest rates finally happens, we should witness a real boost in affordability and flexibility within the housing market.”
Matt Smith, Rightmove’s mortgage expert said: “As we get closer to the likely Base Rate cut, stability in the economy is exactly what we need to keep plans on course. Although there is debate around the timing of the first Base Rate cut due to concerns around service inflation, it is looking increasingly likely that it will either arrive in August or September. In the meantime, we expect to see mortgage rates continue to fall back as lenders compete for business.”
