The Bank of England has held the Base Rate at 3.75%, as policymakers continue to balance easing inflation against renewed pressure from global energy prices.
The decision provides some stability for London’s property market following months of economic and political uncertainty.
Chestertons’ latest market figures show that, despite subdued buyer demand, committed purchasers are still progressing with transactions, which is keeping the market buoyant. Keeping rates flat will be reassuring for those hoping to sell or move.
Chestertons recorded a 20% year-on-year fall in online sales enquiries in June, reflecting the cautious approach adopted by many prospective buyers.
However, new offers and exchanges both rose by 11% compared with June 2025, suggesting that although fewer buyers are entering the market, those who do are serious about moving.
The number of properties being brought to market also fell, with new instructions down 24% year-on-year.
Housing affordability has continued to improve. The average UK house-price-to-earnings ratio has fallen from a peak of 6.9 in 2022 to 5.6, its lowest level in 12 years. In London, it has dropped more sharply, from 11.6 to 8.7.
Adam Jennings, Head of Residential at Chestertons, said: “The decision to hold rates provides some much-needed stability, although buyers will continue to look for clarity over the longer-term direction of borrowing costs.
“We are undoubtedly operating in a challenging sales market, but there are still plenty of motivated buyers out there. Our figures show that committed buyers are continuing to make offers and progress to exchange.
“The reality is that the market is being driven by price. Launch too high and you risk missing that crucial initial period of interest. Launch with an evidence-based pricing strategy and you are far more likely to attract serious buyers.”
The decision comes during Andy Burnham’s first weeks as Prime Minister, with buyers also assessing what the change in leadership could mean for the economy and housing market.
Although Burnham has ruled out changes to stamp duty at the next Budget, greater clarity over his government’s wider tax and housing policies will be important for confidence, particularly in London.
UK inflation fell to 2.6% in June, but higher oil and gas prices continue to complicate the outlook for interest rates.
While the Bank’s decision maintains the Base Rate at 3.75%, confidence in the property market will depend heavily on the future direction of borrowing costs and the wider economic and political outlook.
Improving affordability means there is potential for a relatively quick recovery once buyers feel more certain about the market.
Adam added: “Affordability in London has improved significantly from its recent peak, and there is still underlying demand from people who want or need to move.
“Holding rates provides continuity. Greater clarity over the economic outlook could help release some of the pent-up demand currently sitting on the sidelines.”