If we are right to think that the Bank of England will begin lowering interest rates in June, the recent fall in mortgage rates should be sustained. The resulting drop in the cost of borrowing will boost demand as some first-time buyers who put their plans on hold due to the spikes in mortgage rates in 2022 and 2023, are able to re-enter the market.
Meanwhile there is little reason to think that demand from cash buyers will wane or that forced selling will increase, so we expect house prices to rise by 3% this year. That’s above the consensus forecast that they will decline by 1% or so.
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