Housing market feeling the pinch

Despite the global credit crunch, and its effect on mortgage lending, leading to a fall in house prices, interest rate cuts could help to inject life into the UK property market.

That's the message from the Royal Institution of Chartered Surveyors (Rics), which today (January 16th) issued new figures indicating that last month 49.1 per cent of chartered surveyors reported more of a fall than a rise in property prices, the most negative amount since 1992.

However, a spokesman for the organisation, Ian Perry, stressed that interest rate cuts could help to spur activity in the market, reducing mortgage interest rates and therefore encouraging first time buyers to take their first steps onto the property ladder.

"While sentiment seems to have reached its lowest ebb, the underlying economic conditions are vastly different to what the country experienced in the early 1990s," he explained. "Supply would have to loosen considerably before prices experience a significant dip.

"However, the coming months will be of great importance to the market and many would-be-buyers will be watching the Bank of England's interest rate decisions while lenders remain reluctant to part with finance."

"The Bank of England may have to cut rates further if the market is to remain in a stable condition," he concluded.

Related Articles

HomeBuy Direct offers housing hopeLenders make house price crash worseBanks Squeal Under Government PressureRate cuts have limited successTwo year fixed rates tumble