The cooling impact of global economy, low interest rates and political activities leading to May 2015 general elections have created opportunity for investors and home buyers in the UK property market.
Property Wire, the Publishing Group Limited that publishes helpful guides covering personal finance, home buying, property and savings, reports that with the global economy not doing as well as expected, improvement in real estate markets could be ruled out at least in the short term.
Ray Clancy, the editor of the publishing group, in their latest edition of Property Wire, says that in the UK, interest rates are likely to stay at the historic low of 0.5 percent, at least, until the autumn of 2015, describing this as good news for home buyers.
Clancy recalls that, just six months ago, there was much talk of an interest rate rise, albeit a small one, before the end of the year but that has now receded with the Bank of England’s latest inflation report which says rates could stay unchanged well into 2015.
“The report suggests that the first hike in interest rates from 0.50 percent to 0.75 percent is currently more likely to occur next autumn or even later. While Bank Governor, Mark Carney, has declined to be drawn on the exact timing of the first rate rise, he reiterated that when rates do start rising, it would be slowly and gradually”, he said.
He added that experts were warning that a more challenging domestic and global economic outlook and political uncertainty in the lead up to next year’s general election were having an impact on property price growth in the UK.
“They point out that the UK economy is facing additional challenges from overseas, most notably the continued problems in the Eurozone, the withdrawal of quantitative easing in the United States and the fact that global economic growth has also slowed to a six month low”, he said.
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According to Grainne Gilmore, head of UK residential research at Knight Frank, there are also factors weighing on the mortgage market which are likely to feed through to slower activity, such as the new loan to income criteria from the Bank of England, as well as the new rules for mortgage applications under the Mortgage Market Review started in April this year,’ she pointed out.
Generally, there is a slowing in house price growth, particularly in London where, for example, the prime market has reached a halt and, according to the editor, “this is likely to continue in the run up to the general election next May; that brings its own uncertainties, most notably when it comes to the idea of a ‘mansion tax’ being introduced”.
