Unexpectedly, inflation surged in the 12 months leading up to December 2023, as per data from the Office for National Statistics (ONS). How does this effect landlords?

Navigating the Shifting Tides of the Rental Market: Insights and Forecasts

Unexpectedly, inflation surged in the 12 months leading up to December 2023, as per data from the Office for National Statistics (ONS).

According to the latest ONS figures, the inflation rate climbed to 4% in December, a slight increase from 3.9% in November, primarily driven by higher prices in alcohol and tobacco.

Contrary to expectations, where analysts anticipated a decrease in the inflation rate, the uptick has prompted speculation about the Bank of England maintaining its 'higher for longer' stance on interest rates. Karen Noye, a mortgage expert at wealth manager Quilter, suggested that while rate cuts may be on the horizon later in 2024, those seeking fixed-rate mortgages could find more favorable deals in the meantime.

The recent drop in mortgage rates over the past few months, attributed to lower inflation, has raised optimism for improved sales and activity in the housing market. Tim Bannister, Rightmove's property expert, remarked on the resilience of the market, noting that it remains price-sensitive, but there is a growing confidence among movers determined to proceed with their plans.

Nathan Emerson, the chief executive of agency trade body Propertymark, emphasized the importance of navigating the coming months as a transition period toward a healthier balance. Last year, the Governor of the Bank of England hinted at a cautious approach to interest rates, prioritizing inflation control. Emerson urged homeowners to remain vigilant in budgeting while advising buyers and sellers to carefully plan and explore the best options for their circumstances.

Despite the transitional phase, positive signs are emerging in the property market, with house prices in many areas showing signs of growth. Propertymark expresses optimism that this positive trend will become more widespread as 2024 progresses.