The UK property market looked encouraging when the Bank of England held interest rates at their present level of 0.5%.
The Monetary Policy Committee (MPC) voted to hold rates, putting it in the position to gradually increase them if necessary to return inflation to target levels later on.
This is good news for those who are thinking about buying or remortgaging a property, as the static base rates keep mortgages at their presently competitive levels. Recent HMRC figures also suggest that there was an increase in the number of homes sold in May.
Last month 99,950 properties were sold, up from 98,820 in April. The number of properties sold since the beginning of 2018 is currently 492,350. However, this is lower than the same period in 2017, when total property sales reached 611,980.
Brian Murphy, Mortgage Advice Bureau’s Head of Lending said that so far this year, the overall transactions level appears to be steady. However, he warned that the report results appear to mask the fragmented market and two-tier activity levels currently being seen across the UK. Some areas are seeing house price growth and increased buyer activity while others are dealing with fewer buyers and lower prices.
Mr Murphy added that given the current economic and political uncertainties, the absence of volatility is a positive indicator even though numbers may be down compared to 2017.
Mike Scott, chief property analyst at Yopa, an online estate agency, said that HMRC has confirmed that the property market has recovered from its brief downturn earlier this year. The number of homes sold in May was only 0.5% down on the year before.
Mr. Scott added that all evidence points to the housing market is steady, with the number of homes sold remaining level and prices going up only slightly faster than average earnings. He said there was no reason why the trend can’t continue for the rest of the year unless some disruption in the economy changes things.
Many agents throughout the country believe that Brexit concerns are causing buyers and sellers to stay put until everything is finalised. A similar ‘wait and see’ attitude is often seen in property transactions prior to a general election. However, once the Brexit terms are defined, it’s possible that those who are currently holding back will decide to act, especially since the interest rate decision includes a large hint that rates are likely to go up in the coming months, thanks to the vote from the Bank’s chief economist, Andy Haldane, to raise rates.
This suggests that there may be a small but effective window of opportunity for buyers to use the current market state to their advantage in order to negotiate a more favourable deal, together with getting one of the low fixed-rate deals that are still being offered by lenders looking for more customers. How long that window will stay open remains to be seen.