The Bank of England’s Interest Rate Cut is Welcome News for the Property Market
By Kevin Shaw, National Sales Managing Director, LRG
Encouraging signs for the property sector
The Bank of England’s decision to cut the base rate by 0.25% is a welcome and timely move for both the property sector and the economy more generally. With the rate now back to where it was in March 2023 and a further cut likely before the end of the year (probably in November), this provides renewed momentum for buyers, sellers and developers alike.
Growth supported by sensible policy
After a sluggish spring for GDP, with declines in both April and May, the Bank has rightly judged that now is the moment to ease the brakes.
A property-led approach to growth has been a priority of this government for the last year, and we are now seeing that strategy bear fruit. With careful monetary easing, the sector now growing in a measured, and therefore, a sustainable way.
Our own figures reflect this steady growth. Sales in July were the strongest for over a year – which is especially encouraging given that the summer is typically a quieter period for property transactions.
Risks ahead at the Budget
There are, however, headwinds on the horizon. October’s Budget is likely to bring tax changes, and there has been little, so far, to suggest that the government will respond to the sector’s repeated pleas for fiscal measures to support the property industry, such as a reduction in Stamp Duty. The Chancellor will need to be very careful not to implement tax changes which offset the benefits of falling interest rates and risk stalling recovery.
The property market remains very price-sensitive. While for many, this interest rate cut will help mitigate the rising cost of living alongside any future tax increases, those gains must not be undone.
Resilience, not overheating
The market does not appear to be in any danger of overheating; it is responding to improving conditions in a cool and measured manner. We expect that to continue, and early signs from our sales figures suggest that property will remain a vital driver of growth for the economy.
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