Interest rates: Investors sent dire warning as BoE ‘deliberately sacrifices economy’

The housing market will be hit by the Bank of England decision today, with house prices set to tumble, experts have warned. 

Marcus Dixon, director of UK residential research at JLL said: “A further rise in the base rate, while uncomfortable for those not locked into fixed rates, was not unexpected.

“With it being more a question of when rather than if rates would rise.

“This will of course impact the housing market, albeit this increase was likely already priced into new fixed rates deals and market forecasts.

“The MPC announcement does not change our outlook. JLL are forecasting that higher interest rates, combined with the winding down of the Help to Buy scheme, will mean we see a 30 percent fall in transactions in 2023 compared with 2022, around 300,000 fewer sales nationally.

“JLL are forecasting prices will fall too, by 6 percent UK-wide in 2023, following a strong performance this year. But not all areas will perform in the same way.

“Markets less burdened by debt, with a higher proportion of cash purchasers, are expected to be better insulated, central London for example is forecast to see a 2.5 percent increase in prices next year.”

Jon Neale, head of UK research at JLL added: “On the commercial side, the rise in base rates confirms market expectations, and supports the ongoing repricing which has seen yields move out by 50-125bps over the past few months.”