Agents’ group Propertymark has welcomed the surprise drop in inflation, suggesting it will help housing market confidence.

“This will likely bring yet more positivity and confidence across the housing market. We are beginning to see the foundations for a strong 2025, which could be further strengthened with a potential dip in the base rate when the Bank of England next meet in early in November” explains Propertymark chief executive Nathan Emerson.

“ We are already witnessing many lenders improving their offerings, which is proving very welcome news for home buyers across all the price ranges.”

UK inflation fell unexpectedly to 1.7% in the year to September, the lowest rate in three-and-a-half years.

It is now below the Bank of England’s 2% target, paving the way for interest rates to be cut further next month.

September’s inflation figure is normally used to set how much many benefits rise, such as Universal Credit, next April. This includes all the main disability benefits – personal independence payment, attendance allowance and disability living allowance – as well as carer’s allowance.

With inflation falling lower than most economists forecast, it appears likely that there will be interest rate cuts. 

Susannah Streeter, head of money and markets at business consultancy Hargreaves Lansdown, says: “A quarter percentage point cut is pretty much nailed on, and expectation of a second rate cut in December has also jumped up today.”