Stabilising inflation will create liquidity for property lenders and developers in the year ahead, Shojin has predicted.

The property lender believes that lower inflation will encourage the Bank of England to adopt a  “more accommodative monetary policy stance” leading to lower interest rates. This will lead to increased liquidity for developers and lenders, due to increased purchasing power and higher investor confidence.

“Inflation stabilising at four per cent is better than what the market had forecasted,” said Jacky Chan, head of investor relations at Shojin.

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“This gives the Bank of England confidence that inflation is under control and thus interest rates have peaked.

“Debate in the market now is no longer about whether Bank of England will cut rates, but when. As a result, we are seeing a pick-up in property transactions in the market since the turn of the year, as buyers look at the potential returns that could be generated in a rate cut environment over the next two to three years.

“This generates liquidity for developers and lenders, and thus is positive for the outlook of 2024.”

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Earlier this week, the central bank announced that inflation had fallen from 4.2 per cent to four per cent, down from a peak of 11.1 per cent in October 2022. However, inflation is still double the Bank of England’s target of two per cent.

Chan added that the stabilisation of inflation also “helps the predictability of economic conditions, encouraging long term investment horizons, and, hopefully, setting up investors for a prosperous 2024.”

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