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Interest rate rise may have marginal effect

A survey by Reuters has shown that numerous experts believe the UK housing market will not cool down significantly, regardless of possible action from Bank of England Governor Mark Carney and his colleagues.

Peter Dixon of Commerzbank has said:


“There is clearly lots of momentum behind the market and there are elements of a bubble in London.”


Approximately 30 market analysts responded to the survey. None of them believed that British house prices would fall during the next few years; this was despite the fact that central bank action of some type is deemed highly probable within that time period.

The survey indicated that house prices could go up by almost eight per cent during 2014. Furthermore, it forecasted that a rise of five per cent was possible in 2015. Finally, it suggested that a further increase of four per cent was feasible the year after that.

If house prices do continue to rise, this will have serious implications for those businesses that depend on a buoyant housing market for success. As the national economic recovery is not confined to London, it may well be that there is significant demand for wood flooring in Liverpool and other provincial urban areas.

It appears that the housing market in London has been influenced by an influx of money from abroad. Some of the individuals behind this have large amounts of personal wealth. It has been suggested in some quarters that the super-rich have purchased property in the capital because of the low tax environment that has been achieved.

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