The recent dip in inflation to 2% for the first time in three years brings a glimmer of optimism to the UK housing market. However, as we edge closer to a pivotal election, the future is still uncertain. As estate agents, it's crucial to guide your customers with a pragmatic approach.
It’s unnecessary to spend too many words on the upcoming election; the ins and outs of that particular event are already well-known and barring a rather unexpected outcome, we’ll have a Labour government on the 5th of July, potentially with a large majority. That’s going to lead to a significant shift in housing policy over the coming years, but not necessarily straight away. While words are quick, policy usually takes longer to implement.
The pragmatic approach we should take is to reflect on the known factors of the market today, and the impact those will have in the foreseeable future. For instance, the Bank of England chose to hold the base interest rate at 5.25% at their last meeting on 20 June in order to meet the 2% inflation target, a target that has now been met. This was a widely expected if not somewhat disappointing holding pattern, but there is now an increasing likelihood that the Bank will finally cut rates at their next meeting on 1 August.
When that cut does finally come, it should have a relatively quick impact on the market with lenders hopefully being more agreeable to cutting mortgage rates, giving first-time buyers and remortgagers a boost. Average wages have also grown by 6% annually according to the most recent data from the Office for National Statistics.
We can’t ignore the obvious surge in house prices in recent years alongside wage growth, but that was partly undone by some dips earlier this year, and it was only last month that house prices returned to growth. With Capital Economics forecasting that interest rates could come down to 3% in 2025, and if inflation continues to be contained at or below 2%, there’s a stronger likelihood that affordability and the cost of living in general could become more manageable over the coming months.
Leading the customer journey with confidence
No doubt there will be many buyers and sellers still facing uncertainty, and they will be carefully deliberating whether the time is right for their next big move. That’s where the vital role of the agent comes into play – they’re the pros who can offer guidance when difficult and often life-changing choices must be made. Those of us who have been in the business long enough have seen all the ebbs and flows of the market before, and we’ve gotten used to navigating changing conditions. So, when your customers face uncertainty, it’s the vital role of the agent to be their champion of confidence, to offer insight, build trust and be realistic.
A common question that comes through is whether it’s a good time to buy or sell, and that’s sometimes a hard one to answer given that every customer’s financial situation and personal expectations and needs are unique; and in a market characterised by uncertainty, inflated expectations can be a significant hurdle. With house prices surging over recent years, many sellers have inflated expectations of their property’s worth. Meanwhile, buyers, aware of potential market corrections post-election, might be hesitant to commit. This disparity often leads to stagnation in negotiations.
But by fostering a pragmatic mindset among buyers and sellers, educating customers on realistic pricing and encouraging a focus on long-term value rather than short-term fluctuations, agents can help ensure smoother transactions.
This is also where technology is a necessary and useful tool for agents to help provide more material information and inform customers’ searches. Modern estate agents must carefully blend technological and people skills to succeed, and house buyers will always be better off having a trusted professional alongside them, addressing their questions, setting realistic expectations and helping them make the right decisions in an uncertain market.
