According to Property Wire the decision made on the 9th of June by the banks Monetary Policy Committee to keep the interest rates as low as 0.5 % despite the double increase in target inflation rates has not been a much surprise.
There are still serious concerns about consumer spending and the full effects of the fiscal tightening measures that were implemented in April are not yet fully known. However, if the economy turns a corner the MPC could be forced to make a series of sudden rate rises which could unbalance the housing market, says Jennet Siebrits, head of residential research at consultants CB Richard Ellis.
Nick Hopkinson, director of property company, PPR Estates, is also negating the idea of rising interest rates by The Bank of England. The Bank of England is clearly not going to be able to increase interest rates this year, even though inflation is running away from it he said.
He further stated that public benefits and services seize to increase, employment will decline and an average household income would face a sharp decrease in the rest of 2011. The effect on property market is expected not to be good; the number of complete house sale will face a slump. He further predicted that even if the interest rates continue to remain low, the house prices will definitely fall below by 5%.
Neil Chegwidden, director of residential research at Jones Lang LaSalle, also adhered to Nick Hopkinson word and agreed that this decision would not do much to lift up the mood in National Housing Market.
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