The labour market is very tight with unemployment at the medium term trend of 5.5%, this is down from over 8% a few years ago. Thus, the job market is back to normal and probably tightening. This would be a reason to raise rates since wage pressure would normally increase inflation.
To counter this cost pressure, oil prices and the external environment (China and emerging markets) are exerting deflationary pressures. This has kept the inflation rate very low, well below the 2% target that would induce the MPC (Monetary Policy Committee) at the BOE (Bank of England) to increase rates. The focus of policy is now squarely on inflation.
That does not mean that the MPC is ignoring global growth risks. It just means that the data is still mixed at the moment and does not warrant a move up in rates.
Key Themes: The currency, GBP, will gain over expectations of a future rate rise combined with solid economic performance. Expect a move up in rates sometime in 2016, possibly in the early part.
This will allow the real estate bubble, especially in London, to continue growing until the end of the year. I expect properties in the over 1M GBP range to continue their slide, but due to supply issues, properties in the lower price ranges should do fine.