The industry has been underwhelmed by the Bank of England’s decision to hold interest rates at 0.5%.
However, support was cautiously given for the Bank’s plans to inject an extra £50bn in the
The MPC said it would be extending its quantitative easing scheme today to a total of £135bn – allowing it to print more money to buy government and corporate bonds.
RICS senior economist Brigid O’Leary said: “The Bank of England’s decision to extend their programme of quantitative easing suggests that they are still fairly pessimistic about the economic outlook and, in particular, the outlook for bank lending.
“It also suggests that they expect interest rates to stay low for the foreseeable future. So far, there has not been much evidence that quantitative easing has boosted bank lending significantly.
“RICS hope that increasing the size of the asset-purchasing scheme will stimulate bank lending and help improve availability of mortgage finance. That is one vital way to allow the recent increase in buyer enquiries to translate into an increase in sales and may help to lift the housing market out of its depressed state.”
James Thomas, head of residential development and investment at Jones Lang LaSalle, said: “Hopefully some of the increase in the supply of money will find its way to mortgages.
“Although there are some signs of stabilisation, the overall tone of the market is still negative.
“Unemployment continues to increase, with some analysts predicting that it will rise above 3m by the end of next year. This will hit potential buyers who may be reluctant to commit to new purchases.”
Paul Guest, head of EMEA research at JLL, said: “With economic forecasts seeing further downward revision, prospects for the occupier market are bleak.
“Demand for commercial property will continue to be weak as cost cutting is still the main focus for corporates. Therefore, further rental declines are expected across all the sectors.”
Nick Hopkinson, director of Property Portfolio Rescue (PPR), said: “Interest rates are unlikely to move from 0.5% for the foreseeable future but, with lenders remaining cautious, this will have little impact on those looking to secure a mortgage or raise finance.
“Consumers shouldn’t be fooled by the ad hoc good news stories, which have been emerging over recent weeks.
“We are not nearing the bottom of the market – house prices still have a long way to fall, unemployment figures continue to rise and repossessions have almost doubled over the last year.
“Those delaying their house sale in anticipation of a change in fortunes and imminent price rises will be bitterly disappointed.”
However, Keith Steventon, head of research at Atisreal, sounded a more optimistic note.
He said: “The results from the Bank of England’s Trends in lending report showed banks might now ease up the conditions that they impose on borrowers.
“That, plus in increase in interest by investors both domestic and oversees, encourages us to expect a significant improvement in the market after the summer.”
