A housing development firm boss has stated that more interest rates are needed in order to bring some stability back to the housing market, which he states is facing a rocky eighteen months ahead. The Chief Executive of Barratt Developments, Mark Clare, said that house prices are likely to remain flat for the next year and a half, and whilst the recent interest rate cuts have eased the problems in the housing market to a degree, further cuts are needed.
Mr Clare stated: ‘I am expecting something like flat prices for the full financial year, and I wouldn’t assume it would be very different in the next financial year. It depends on what happens in the markets.’
He also said: ‘The indications are fairly strong that we will see further interest rate reductions in the future and that can only help.’
The Bank of England cut the base rate by 0.25% in December, and again in February, although rates remained unchanged after the last Monetary Policy Committee meeting in March. The Bank of England has stated that whilst they were keen to reduce interest rates in order to shore up the ailing economy and improve consumer confidence, inflationary pressures also needed to be taken into account when deciding on interest rate movement.
It is thought that there will be at least one more interest rate cut before this summer, with experts predicting that there will be further cuts in the last half of the year. Some have predicted that the base rate could fall to 4% by the end of the year or early next year, but the governor of the Bank of England recently stated that rates were unlikely to fall by as much as some industry professionals were predicting.
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