After a bruising start to summer, the stabilising influence of a base rate hold and unchanging inflation mean the property market can move forward.
On the 18th June, the Bank of England’s Monetary Policy Committee (MPC) voted to hold the base rate at 3.75% for an additional month.
Although many forecasters predicted a rise, the surprising announcement that inflation had remained at 2.8%, coupled with a possible end to Middle Eastern hostilities, meant the committee felt no need to apply further brakes to the economy.
The committee didn’t present a united front when it came to the vote (two voted for a rise), but national property auctioneer Auction House believes that this announcement will lessen some of the caution that has stagnated the property market.
A confidence boost
Before the announcement, an uncertain outlook had reduced the general property market to a crawl. As a result, transaction times reached a record 21.5 weeks from listing to completion.
With rising inflation fears put to bed – at least for the present – there are now hopes that the early summer slowdown can be reversed.
Commenting on the announcement, Managing Director of Auction House Oliver Prior said:
“A base rate hold, a possible peace deal in the Middle East and an unexpectedly steady 2.8% inflation rate mean we can finally start to plan ahead with some confidence.
“This should combat some of the caution that has dominated in recent months, which led to the largest reduction of asking prices in 14 years, according to Rightmove data. Those who are prepared to take a longer-term view will now be in a particularly strong position when it comes to new property investments.”
Auction remains a secure choice
A more positive attitude will also allow the auction sector to grow even further. The general property market may have been sluggish up until now, but auction has already been bucking the trend, says Oliver:
“Auction House is still selling more property than ever before, which is a testament to the health of the auction market. This was demonstrated by our Auction House London team transacting on an £18.2 million mixed-use parade and a £5.3 million commercial asset in the same week.
“Conditions remain challenging, but the certainty of auction during more difficult times means that buyers and sellers can complete their transactions with confidence. A sunnier outlook this month will only strengthen that sentiment.”
He goes on to conclude:
“We now need to wait to see if the US/Iran peace holds and how markets respond. By next month we hope to have a clearer idea of the road ahead and more certainty around the future development of the market.”
