A recent report from the Royal Institute of Chartered Surveyors has suggested that the interest rate cut from the Bank of England may have done very little to help the housing market in terms of stabilising it. Officials from the Institute have claimed that house prices fell at the fastest pace in over ten years in the three months leading up to January. Industry experts have said that this year looks as though it will continue to be turbulent in terms of house price inflation.
The information came from the January survey for the Royal Institute of Chartered Surveyors. One leading economist stated: “The very weak January RICS survey will heighten concern that the housing market is headed for a sharp correction in the face of stretched affordability and tighter lending practices resulting from the credit crunch.”
A number of officials have said that the fall in house prices is connected to lower levels of demand in the housing sector and not an increase of supply, with one official stating: “A lack of demand and confidence in the housing market is clearly behind the recent price slowdown. Tightening mortgage lending criteria is a block to many who are keen to take the housing market plunge. Agents are finding it difficult to market properties to an audience which has decided to watch the current economic theatre from the wings.”
Stretched affordability in the housing market was not helped when many lenders failed to pass on the full rate cut following the December base rate cut, which resulted in those lenders coming under fire and criticism. However, following the most recent interest rate cut in February 90% of the top ten lenders announced within hours that they would be passing on the full rate cut to borrowers.
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