According to this recent Savills research, price growth will remain at modest levels until the market sees more significant mortgage rate cuts.
Over the past few weeks, mortgage rates have remained mostly the same despite a slight increase in swap rates. While this stability has encouraged positive sentiment in the market, the report states that lower rates will boost demand in earnest.
The lowering of mortgage rates is dependent on Bank of England base rate cuts. However, inflation in April was more elevated than many forecasters expected, with The Office of National Statistics recording inflation data of 2.3%.
This may mean the first rate cut comes later than previously anticipated. Oxford Economics has predicted that the base rate could drop in August, with an additional cut later this year.
Savills believes that the speculation surrounding interest rates will likely affect the market much more than the political uncertainty generated by the general election, as the major parties haven’t announced any potentially disruptive policies so far.
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