Analysis: UK housing market recovery could be impacted by revised rate expectations

The UK housing market recovery may face some obstacles due to revised rate expectations, according to analysis from Bloomberg Intelligence. The delay in a base rate cut could slow down the progress seen in the market, as some of the best buy mortgage rates have reversed since the beginning of the year.

Despite this setback, there are positive signs in the market. Mortgage approvals for house purchase have reached their highest level in nearly two years, indicating increasing activity. Additionally, average house prices have only experienced slight month-on-month changes, with Bloomberg Intelligence predicting low single-digit house price growth for the year.

The markets are now anticipating fewer Bank of England base rate cuts over the next three years, with rates falling to 4.5% by next year and 3.8% by mid-2027. This more conservative prediction could lead to a sluggish recovery for homebuilders.

Nevertheless, sentiment towards the housing market in the UK has become more positive, as buyers adjust to higher interest rates and stability in the market. There is potential for a surge in demand, especially in London where improved affordability is reigniting interest in the city’s housing market.

Overall, while challenges exist, there are also opportunities for growth and recovery in the UK housing market. Stay tuned for further developments in this ever-evolving sector.