Senior commentators from the property sector comment on data showing inflation remained steady at the Bank of England's target rate of 2 per cent in June.
Nathan Emerson, Propertymark CEO, tells FM Magazine:“The positive news from today’s figures is that inflation remains in line with the Bank of England’s target of two per cent, which means that consumers should not continue to witness the price rises we saw across 2022 and 2023.
“Although a further drop in inflation today would have been welcome by consumers, Propertymark is keen to see the Bank of England consider a dip in interest rates as soon as sensible.
When the pathway to lower interest rates finally happens, we should witness a real boost in affordability and flexibility within the housing market.”
Paresh Raja, CEO of Market Financial Solutions, says: “Borrowers have had to navigate the inflation storm over the past two years, but the past three months suggest it has been brought under control.
This is good news for borrowers, and will likely provide prospective buyers with greater confidence in the second half of the year.
“Coupled with the arrival of a new government with a significant majority, there is a welcome sense of stability and calm returning to the property market.
Indeed, lower inflation and less economic turbulence could prompt the Bank of England to finally cut the base rate in two weeks' time, which would be another boost for borrowers.
“However, it’s crucial to acknowledge that the base rate won’t be cut as quickly or significantly as it was hiked.
Brokers will need to support borrowers and manage expectations accordingly.
Meanwhile, lenders should focus on offering a broad range of product types that enable brokers and borrowers to choose options that best match their needs and their own predictions for what the base rate will do over the coming months and years."
Investors must remain vigilant in case of more economic turbulence
Jatin Ondhia, CEO of Shojin, cautions investors against more economic turbulence.
Suggesting they should remain vigilant, he says: “With inflation already at the 2% target, the fact it has remained unchanged for another month will likely bring reassurance to investors.
In recent times, the focus was on finding investment options that could outpace high inflation.
Now, with inflation and interest rates both stable, investors can approach the second half of 2024 with greater clarity.
“The expectation remains that the base rate will be cut twice this year, probably starting at the Bank of England's next meeting on 1st August.
But that is not a given - the Bank may fear another uptick in inflation over the coming months.
So, investors need to remain vigilant, consider broader economic factors, including any new policies bought in by the new government, and then adapt their plans accordingly.
“We should expect diversification to sit at the heart of many people's investment strategies, with a focus on balancing different savings products and lower-risk investments with some higher-risk options to aim for greater growth in the medium- to long-term.
The evolving investment trends throughout the rest of this year will be interesting to observe, especially given the more stable economic environment compared to 12 months ago."
