Trump’s Election and UK Base Rate reduction -Impact on the Cotswolds Residential market
Senior Partner
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The President can be expected to implement many of the policies he considers will ensure that ‘America is great again,’ some of which are isolationist and protectionist.
The general feeling is that the American economy will strengthen and prosper, however the lower taxes promised, if implemented are likely to be inflationary. This will in turn impact other economies across the world. Stock markets have reacted positively, but rising inflation expectations, together with rising bond yields, have the potential to dampen the market mood.
A few disillusioned Democrats have already begun to abandon the promised land and look for bolt holes out of the US, however a mass exodus is unlikely, and will have little affect on the UK residential market. We have though already had a couple of inquiries for houses in the Cotswolds as a direct result of the election’s outcome !
The Governor of the Bank of England is not prepared to be drawn on speculation about the affect of any tariffs that may or may not be implemented in favour of the US, at this stage.
The Bank of England has reduced interest rates for the second time in three months to 4.75% and has said the path is “downward” but “gradual” . It comments that there are a lot of risks in the world. It will be some time before the extent of these pressures becomes clear. Also, it will take time to evaluate the affect of the increase in Employers NI rates. Inevitably prices will be pushed higher at a faster rate, resulting in higher inflation following last week’s Budget. The OBR’s growth forecast will be watched closely.
The Bank’s base rate heavily impacts the level of borrowing and mortgage rates, which are expected in the short term to reduce. Together with assisting consumer spending, this should help sustain the UK residential property market. The Cotswolds residential market remains resilient, supported by the certainty that the recent budget is now behind us and, the steady hand of Andrew Bailey.
We wait to see how the market perceives things but believe confidence will return.
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