The rate of inflation slowed to 2.3% in April, Office for National Statistics (ONS) data shows.
It means the consumer price index or cost of living measure has fallen from 3.2% in March and is closer to the Bank of England’s 2% target.
This may raise hopes among agents and buyers that interest rates will be cut in the coming months by the Bank of England, bringing down the cost of borrowing.
Emily Williams, director of research at Savills, said: “The inflation figures will give the markets more confidence that a cut to the base rate is on the horizon. If this feeds through into mortgage pricing, we expect to see transactional activity start to pick up as it did at the start of the year. Mortgage affordability is the largest challenge currently facing buyers, with mortgage approvals in March 2024 23% below the pre-pandemic norm.
“Political and economic uncertainty means buyers will likely remain cautious, but the overall outlook has certainly improved, pointing to relatively modest house price growth this year. Savills revised forecast expects house prices to grow 2.5% in 2024.”
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