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Private Rent and House Prices, UK: June 2024: "Inflation hitting the 2% target could transform the property market"

ended 19. June 2024

The Office for National Statistics has just published its Private Rent and House Prices, UK: June 2024 showing UK house prices increased by 1.1% in the 12 months to April 2024 — and that average rents increased by 8.7% in the 12 months to May 2024, down from 8.9% in the 12 months to April 2024. Following today's inflation data showing CPI is back to target, Newspage asked experts for their views and whether they think the property market looks set to improve in the second half. Their views are below.

10 responses from the Newspage community

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Andrew MontlakeVerified
Managing Director at Coreco
Average annual house price growth of 1.1% shows the resilience of the property market and defies the doom-mongers. Inflation hitting the 2% target could transform the property market in the second half of the year. Even if Threadneedle Street leaves rates on hold tomorrow, which is the consensus, a cut is now coming and that may start feeing through into lender pricing. That in turn will boost demand for property and could see prices start to rise again. Despite the current General Election uncertainty, many in the property market will be quietly cautious as there is a huge amount of pent-up demand out there. Those who have been sitting on their hands could hit Rightmove in their droves if lenders start lowering rates. Whisper it only but things are starting to look a little more positive.
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Ken JamesVerified
Director at Contractor Mortgage Services
To rent or to buy, that is the question. Wednesday's inflation data and the potential base rate cut that will follow it, if not in June then later in the summer, could see more prospective buyers make the leap into homeownership. There will be many prospective buyers who will feel that rents have increased too far, and that the time to buy has arrived. While the inflation data may cause some renters to reassess their options, many may view the current market conditions as still too wild and unpredictable and will prefer to see stability settle back before making that jump. I believe we will see a marked improvement in the second half of this year for the mortgage market, as there seems to be fewer reasons for the Bank of England MPC to keep rates at 5.25%. A rate cut will be the injection of caffeine the market needs.
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Rohit KohliVerified
Director at The Mortgage Stop
Now's the time to look forward, not back, as a rate reduction that is surely now on the cards will be a double-edged sword. For existing borrowers, it will bring some respite as potentially their mortgage payments ease. However, a rate cut will also reignite demand from those who are playing the wait-and-see approach and without increased housing stock on the market house prices are only going to go up making it even harder for first-time buyers to get on the property ladder. A rate cut will help boost confidence but we still have a supply issue that isn't going away any time soon.
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Harps GarchaVerified
Director at Brooklyns Financial
This latest data shows the property market hasn't imploded as many predicted. Wednesday's inflation news will provide further relief to the property market. It gives the Bank of England the green light to consider reducing interest rates, though immediate changes are unlikely. Inflation finally arriving at target is likely to lead to a reduction in swap rates, which will have a positive impact on mortgage rates, providing a much-needed boost to the housing market. While the rental market has already suffered, the reduction in mortgage rates may help slow the rise in rents. However, a longer-term strategy is essential to encourage private landlords back into the market and ensure a balanced and stable housing sector.
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Stephen PerkinsVerified
Managing Director at Yellow Brick Mortgages
The collapse in property prices many predicted has not materialised. A summer reduction in the base rate will light the coals of the property market barbecue and get it sizzling. Those who said house prices were going to fall by as much as 25%-30% have seen their predictions go up in flames and turn into charcoal. House prices have held firm despite economic and interest rate pressure and could grow again in the second half of 2024 as activity levels increase.
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Chris BarryVerified
Director at Thomas Legal
When the base rate is cut, whether that's Thursday or later in the summer, demand will rise and house prices will push higher. This will then filter through to rental prices and in turn, contribute to the housing figure within the inflation numbers (CPIH), and inflation will begin to rise again.
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Dariusz KarpowiczVerified
Director at Albion Financial Advice
The 2% target is here sooner than anticipated. While this doesn't mean prices are going down, it does mean they're growing at a slower pace. I’m still not 100% sure this will be enough for the Bank of England to cut the interest rate immediately, but it's a step in the right direction. If the Bank of England does decide to cut rates soon, it could boost confidence in the property market. Lower interest rates would make mortgages more affordable, potentially driving up demand for houses and stabilising or even increasing house prices. For renters, lower mortgage rates might encourage landlords to hold onto their properties rather than selling, which could help stabilise rent prices. The second half of 2024 could be better than the first, with a possible rate cut improving sentiment and increasing activity in the property market. Today's inflation data is a positive sign, and if it leads to a rate cut, we could see a more dynamic property market in the coming months.
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Simon BridglandVerified
Director at Charwin Private Clients
It's encouraging to see house price growth, however low, amid all the turmoil. It's equally encouraging that average rent growth appears to have topped out. Tenants have been under the cosh for too long. Wednesday's inflation data, showing a return to target, will inject confidence into borrowers up and down the country, stimulating further growth in the property sector. The housing policies of the next Government will be crucial in fixing the ongoing lack of supply. Let's hope for real and effective policy rather than yet more bluster.
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Graham CoxVerified
Director at Bridging Hub
Inflation falling back to its 2% target is great news, but with the UK economy stagnant, it's exasperating the Bank of England are taking so long to cut the base rate. The first reduction, possibly this week, will stimulate the moribund housing market, provide a much needed economic boost and provide confidence that the worst is behind us.
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Tim Allcott0
Managing Partner at Allcott Associates
Cutting interest rates will put a rocket up the housing market. Property is already moving much better than expected, highlighting the resilience of the market in this country. Having said that, there has been a sizeable group for whom the need to move was not urgent watching and waiting for better mortgage deals. For them, the drop in rates will kickstart their property search. The irony is that this surge in demand will drive up property prices, so whatever savings are made on mortgage payments will likely be lost on the increased purchase prices.