Investment expert shares his prediction
Having “fallen off a cliff” this year, home sales in the UK are forecast to begin their climb back up in the first quarter of next year, according to an expert from asset management firm deVere Group.
The organisation’s investment director, James Green (pictured), believes that towards the end of the year, the Bank of England will start slowing down base rate increases, concerned about the impact on the economy of higher borrowing costs.
He pointed out that this would then unleash some of the pent-up demand and predicted that home sales in the UK would begin to rebound in Q1 2024.
UK home sales are on track to drop to the lowest since 2012 this year as stubbornly high mortgage rates grip the housing market. https://t.co/zmOTysrZuq
— Mortgage Introducer (@MortgageChat) August 30, 2023
“UK home sales have fallen off a cliff this year with stubbornly high mortgage rates having had a stranglehold on the housing market as the Bank of England has been raising interest rates at a clip to try and bring down red-hot inflation,” Green said.
“Inflation peaked at 11.1% last October and has since eased to 6.8% in July – but this is still more than three times the bank’s 2% target. As such, UK interest rates will peak at 5.5% next month, which will further weaken demand in the housing market.”
Green shared that deVere’s property investment division had “clients eager to make the savvy investment in UK real estate,” but were waiting for “signals from the Bank of England that the cost of borrowing has stopped accelerating.”
“Now that inflation is gradually dropping back from generational highs, the central bank will be more likely to be persuaded to pause its rate hike agenda, which will boost the UK’s housing market,” the investment director said. “As rates begin to fall, there will be some decent property investment opportunities in the UK that investors will be keen to seize.”
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