Base rate remains at 5.00%
Many Britons will be disappointed by the Bank of England’s decision to keep the base rate at 5.00%. The majority of the population in the UK have been feeling the effects of the credit crunch. Food, utilities and fuel costs have all risen. The burden of the negative economy is also being felt by the housing market.
Neil Chegwidden, Head of Residential Research at Jones Lang LaSalle, stated that the ”base rate decision will have minimal impact for the UK housing market. Despite all the gloom and the endless residential column inches, UK house prices have only declined by 0.5% a month in the first four months of 2008 – a drop of just 1.9% (according to the most reliable house price index, Nationwide). And whilst there are clear downside risks for the housing market, and most notably on transaction volumes, the fact that house prices have not fallen off a cliff during this period of intense negativity should tell us something about the resilience of house prices.”
Neil Chegwidden predicts that the UK mainstream prices will fall by 7-9% in 2008, with some quarterly price rises in 2009. This is good news for homeowners in areas such as Blackheath that have been experiencing house price falls of at least 3%.