Davies, who is chairman of the Conveyancing Foundation, said the BoE’s fifth consecutive rate rise would push inflation up further and said the bank’s “its gloomy predictions could become a self-fulfilling prophecy”.
Davies been in conveyancing industry for over 30 years, with an 18-year stint at Convey365 where he was managing director before moving on to The Conveyancing Academy where he was also managing director for six years.
He said the central bank needed to slow down on interest rises as inflation was to be expected following the economic aftershocks of Covid-19.
He claimed the property market was currently buoyant and showing no signs of slowing down but that “trigger happy rate rises” would send shockwaves through the market and damage consumer confidence.
Davies said people move house for many reasons and financial indicators rarely significantly deter a determined buyer or seller in the short-term, but that if the BoE continues to raise interest rates for what he claimed was “no good reason”, then motivation could be affected across the board.
Davies predicted that the transactional property market would not be affected in the short-term and house prices would continue to rise, but warned further action by the Bank could damage the market.
Curtailing the market
He added: “I agree with some economists that house prices are set to rise nationally at six per cent as a minimum for the remainder of this year and more in pockets across the country, where demand is high and properties for sale are scarce, and this will continue to be the case in my opinion despite the interest rate rises and increases in inflation and household expenditure.
“The bank will be guilty of curtailing the property market if the focus continues to be on bad and false news which is not based on economic reality and sound economic principals which have been proven over time.”
Davies said raising rates again would create a “vicious circle of increased household expenditure and increased inflation”.
“There has been a lot of speculation about raising fuel prices and how this will lead to inflation and the need for an increase in interest rates to prevent this, which is nonsense,” he said.
“Increasing household expenditure by increasing interest rates increases inflation – period. Only savers, banks and building societies benefit from increasing rates as they receive more interest on their savings and lend money at higher rates.”
