Latest interest rate rise unlikely to affect 2007 house price growth

Savills believes the latest interest rate rise is unlikely to affect 2007 house price growth, but it could have a major impact on consumer confidence if they believe another interest rise may occur, according to Savills residential research.

Mainstream markets

Following the 0.25 percentage point rise announced today by the Bank of England, Yolande Barnes Director of Savills Residential Research comments as follows:

"We see no reason to adjust our 2007 forecast for growth in the UK housing market of 7%. However a further 0.25 percentage point rise would probably lead to households reducing their spending on housing, which in turn would lead to both a fall in turnover and could well impact on the rate that property values rise this year.

"We see no cause for price falls at this stage"

Top End Prime Markets

"We remain bullish because interest rates have no direct impact on this market. There is still a bank of equity to fund these markets in the form of bonuses and overseas investors and purchasers.

"Barring an unexpected economic shock our top end prime markets, especially in London, are set fair."