Stuart Law, managing director of Assetz, commented on the minutes of November's Monetary Policy Committee (MPC) meeting, in which two members voted against a 0.25% rise in interest rates: "The decision to raise interest rates to 5% at the start of November was not as clear cut as many in the industry had anticipated, with two members voting against a rise.
"This division within the MPC, along with the latest results showing inflation is steady at 2.4% and lower than the 2.6% anticipated, gives hope to the housing market that the Bank may refrain from raising rates again in the near future. The sudden admission by the Bank of England that inflation risk is a lot lower than they had previously suggested confirms our view that 5% is quite possibly the top of this cycle in rates.
"House prices rises over the next two years are unlikely to be interest-rate led, but rather the result of continued high levels of immigration into the UK, driven by the expansion of the EU to include additional countries such as Poland, Bulgaria and Romania.
"Growth as a result of a severe supply and demand imbalance is not something the Bank of England should attempt to manage, as it would take excessively high levels of interest rates to prevent the supply/demand imbalance from driving up prices."
