Will Interest Rate Cuts Save the Housing Market? by:Philip Doleman
As the recession is taking its toll on business and the housing market the Bank of
England has cut interest rates to 0.5 mark really do us any good?
With nearly everyone in agreement that the financial crisis is a global one, it is clear to see the effects that this is having in the UK. In the last year house prices have fallen by a record 16.5 in the last three months of 2008. UK spending has slowed to 0.4 rise in January.
So what does all this mean for the housing market? According to the land registry prices in England and Wales have dropped by another 2 to 16.5%. The average property value has now dropped to 153,862 down by 30,361 over the past year. The drop now means prices have fallen for 18 months in a row.
It is not all doom and gloom though with estate agents claiming enquires from potential buyers is on the up. Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors has also said "Lower prices and the cheap cost of money has begun to fuel an increase in buyer interest as reflected in the RICS "new buyer enquiries" series which has risen for four consecutive months,". With better rates of finance and the lower costs of mortgages first time buyers with a deposit should now find it easier to take that first step on to the housing ladder, though those with savings will find it harder to save with lower interest rates on their savings.
All in all it looks like the housing market is reliable on the state of the economy and the interest rates cuts can only help that. Though the effects of the cuts will take time to filter through, once the banks and lenders start to resume the business of lending we should see the housing market respond positively.
About the author
Philip Doleman runs www.MoveWise.co.uk a private property sales website based in the UK.