Return to a buyers market
Increased market supply as sellers look to realise gains

Property commentators are predicting a return to a buyers’ market following recent interest rate rises – which are expected to stall house price growth.

The Monetary Policy Committee have increased interest rates by a fifth time in as little a year to their highest level for more than six years – in a move to bring inflation back in line with the Bank of England’s 2 per cent target.

The widely expected increases are likely to accentuate the slowdown in property price growth that has been evident since the last base rate rise. It is also expected to drive more properties to market as sellers try to lock in gains.

This latest rate rise is likely to reinforce the weakening in demand for housing, which in turn will feed through into slower house price inflation over the second half of the year. With evidence of increasing amounts of new supply coming to the market, sales volumes are set to decline and we could well see the return of a buyers’ market over the next six months.

The Council of Mortgage Lenders estimates that 2m borrowers will come off competitively-priced fixed-rate deals over the next 18 months to be met with sharply increased monthly repayments.

This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without appropriate professional advice after a thorough examination of their particular situation. Budget 2007 information included in this article is subject to the Finance Bill becoming law.

Article date: 07.07