UK property market sees green shoots as buyers anticipate rate cut, lower mortgage rates

Hong Kong- and mainland China-based buyers could swarm to the UK property market once again later this year, drawn by lower mortgage rates amid increasing hopes the Bank of England could lower interest rates after consumer prices moderated in recent months, according to analysts.

But they remain mindful of new tax measures that could also make property in Europe’s second-largest economy become more expensive for investors, specifically for those who do not live there and buy homes for housing their children studying in the UK.

Inflation held steady at 2 per cent in June for the third straight month, keeping in line with the Bank of England’s target, official data showed. This trend is bolstering the case for an interest rate cut, a development that is likely to boost home-buying in the UK, analysts said.

“The outlook for interest rates and mortgage rates for the rest of 2024 are looking very good,” said Paul Finch, director at London-based property agency Beauchamp Estates.

“I believe that in September we will see the first interest rate reduction, and as a result lending and mortgage offers will improve, typically when we have an interest rate reduction the number of applicants for homes rises by up to 40 per cent and sales deals rise by 20 per cent,” he added.

Interest rates in the UK were raised to the current level of 5.25 per cent from 0.10 per cent in March 2020 as consumer prices surged. The Bank of England acted after double-digit inflation prevailed between September 2022 and March 2023.