Property investors eye interest rate cuts

Property investors eye interest rate cuts

0:04 AM, 30th July 2024, About 2 months ago

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Property investors are betting on interest rate cuts to fuel market optimism rather than worrying about political change or global tensions, according to a new report.

Handelsbanken’s latest survey of landlords with an average of 35 properties each reveals more than half are buoyed by the prospect of base rate reductions in the coming months.

While tenant stress is easing, with fewer rental deferrals and late payments, void periods have increased.

The bank says 60% of respondents have seen voids rise, up from 54% last year, although Handelsbanken believes this may be down to tenant demand for quality and EPC ratings.

Cautious optimism around the property market

Handelsbanken’s chief credit officer, Simon Bradley, said: “There is cautious optimism around the property market and activity amongst existing investors is picking up.

“It may be that many have decided the economy has potentially reached the top of the interest rate cycle and that the time is right to engage in new deals.”

He adds: “The report also shows signs of tentative improvements in the stress factors affecting tenants, which have been driven in recent times by the cost of living and energy crises.”

Prospect of a rate cut in August

More than half (52%) of respondents are optimistic about the market because of the prospect of a rate cut in August and potentially another one by the end of the year.

The panel is reflective of the wider market sentiment on the impact of a Labour government, with 51% saying it wouldn’t affect business plans.

Around two-fifths (40%) said geopolitical uncertainty made them more positive about the UK’s property market, while 44% said it had no impact.

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