The Bank of England Monetary Policy Committee’s decision not to cut interest rates for the immediate future gives cause for confidence in the Scottish property market, say local solicitors and estate agents.
The Bank of England voted on 14 July 2016, by a majority of eight to one, to keep the Bank Rate (commonly referred to as ‘The Bank of England Base Rate’) at 0.5%, extending to 88 months the time that the rate has been at this historic low. The announcement came as a surprise to many economic commentators who had expected that rates would be cut following the result of the so-called ‘Brexit’ referendum vote, particularly in light of the Bank of England forecasting slower economic growth and reduced gross domestic product (GDP).
Robert Carroll, Managing Director of MOV8 Real Estate, Estate Agents and Solicitors, in Edinburgh, believes that this is good news for the housing market in Scotland.
“The Bank of England singled-out the housing market as a concern following the result of the EU referendum result, citing indications that there was a significant weakening in expected housing market activity.
“However, we have been saying since before the Referendum that, whilst the property market in Scotland is not immune to events that impact upon the wider economy, it is far less reliant on wealth generated by the city of London where the weakening in activity is most likely being experienced.
“Scotland’s property market is relatively insular, with the majority of property buyers in Scotland being from Scotland, often moving a relatively short distance from their previous home.
“We have been seeing business as usual in Edinburgh and the surrounding areas, with property prices remaining strong and sales times continuing to be quicker than they have been for several years.
The decision not to cut interest rates may at first not seem like great news for people who are buying homes, but Carroll believes that it’s a good sign for home owners and buyers, saying, “It is a good sign that the Bank of England has not seen an interest rate drop as being necessary to stimulate the economy. In spite of interest rates staying put, they remain at a historic low and mortgage availability, products and rates are excellent.
“With property traditionally being seen as one of the ‘safer’ investments and Scotland being better insulated from the fluctuations in the London economy, in spite of recent events, property in Scotland remains an attractive option for homebuyers and investors.”
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