The Bank of England, following yesterday’s decision to maintain its base interest rate at 4.75%, has now reported that the residential sales market is ‘softening’ following Chancellor Rachel Reeves’ budget.

Within its most recent ‘summary of business conditions’ gleaned from its contacts around the UK, the bank reports ‘cooling sentiment in the housing market’.

On the one hand its latest report reveals that while the supply of properties for sale continues to improve, purchasers do not see this as a good time to buy.

“Contacts report that the Budget accentuated this feeling and may have cooled a housing market that was recovering from a weak first half of 2024,” the report says.

“Affordability is a key constraint with the top end of the market generally slower than the bottom.

“First-time buyers are reportedly very active. House prices are up by low single digits on a year ago and the expectation is of similar – or perhaps lower – increases in the year ahead.

The Bank of England report also takes an indirect pop at Scotland’s politicians, who recently confirmed that they would be making a temporary rent control scheme permanent.

“Rent inflation continues to moderate except in Scotland where regulatory changes are leading to a rally in rents,” the report says. Across the UK, the bank’s contacts report “rent growth in the mid-to-single digits relative to a year ago”.

“Properties are taking a bit longer to rent owing to cooler demand and unaffordability of rents. However, rental supply is not increasing as landlords continue to exit the market,” the report adds.

Read the report in full.