Revised rate expectations may give UK housing market a reprieve
This morning’s Rightmove data showing asking prices falling by 0.6% in June, down 0.5% year-on-year, highlights the fragile state of the UK housing market. They follow last week’s RICS survey showing a large net majority of UK estate agents reporting falling prices (-35%), new buyer enquiries (-34%) and sales (-37%). The catalyst for the recent deterioration in housing market sentiment has been the events in the Middle East, the rise in oil prices above $100 per barrel and expectations the Bank of England might raise rates three times to 4.5%.
However, the news over the weekend that a more durable US/Iran ceasefire is at hand has pushed Brent crude oil prices down to $82 per barrel this morning. Similarly, just one 25bp Bank of England rate hike is now fully priced in by markets, pushing UK 2-5 year swap rates down towards 4%. Growing confidence in any peace deal and further falls in oil prices could well persuade markets Bank of England rates are more likely to stay on hold in 2026, helping the UK housing market in the second half of the year.
Read the Weekly in Full Here: