The managing director of Convey Law has criticised continued rises in the Bank of England interest rate and warned further increases will damage the property market.
Lloyd Davies, who is also chairman of the Conveyancing Foundation charity, has forecast “a slow start to 2023” for residential property sales.
He said: “Interest rate rises again this month show the Bank of England have little regard or compassion or understanding of the current state of the UK or world economy.
“Inflation has reduced this month because petrol prices have come down in price. Commodities such as food and alcohol continue to increase as do heating costs and so inflation has increased this year – so what. These price increases are due to Brexit and the war in the Ukraine and COVID and cannot be helped at the moment.
“Raising interest rates won’t decrease the cost of fuel, food or other absolute household necessities. It will compound the position by making houseowners pay more for their mortgages – unnecessarily and irresponsibly.
“The UK inflation rate post Covid is very similar to that in other parts of Europe and the world and for the same reasons. High household running costs – loads of money not used during the pandemic – the war in the Ukraine and the embargo on Russian fuel.
And Davies says the market will remain ‘flat’ if rate rises continue: “Raising interest rates will have a negative impact on the housing market. I believe that we will not see further interest rate rises and we may even see a reduction in the spring, as the chronic effects of raising interest rates at a time when the economy needs stimulation are felt.
“If not then we will continue to see a flat housing market with purchasers reticent and lenders finding it difficult to provide appropriate mortgage lending rates.”
After a typical end to the year for the market, partly affected by the World Cup, Davies also forecast “a slow start to 2023”:
“Seasonality has come back into play, with November and December looking like they normally did pre Covid at 75% and 50% of usual monthly transaction figures leading up to Christmas.
“The football World Cup may also have had an impact, like most national and sporting events did on conveyancing transaction volumes pre Covid. Punters watched the footie as opposed to looking for houses to buy!”
He added: “I think it’s going to be a slow start to 2023. Conveyancers will get quicker hopefully and transaction timelines will reduce as the capacity numbers subside, bringing us back to four months as opposed to five from offer to completion.
“Transaction numbers and the gloominess will lift towards the summer as interest rates and lending stabilise and the Government look to lift the economy again before the General Election in May 2024.”
