Agents call for serious interest rate cut to save market

Reaction to the Bank of England’s decision to hold interest rates at 5% has gone down badly within the industry.

The decision was announced hours after the latest Halifax survey showed house prices plunging by 12.7% in a year – the fastest fall since the Depression of 1931.

With average house prices now back to March 2006, an estimated 200,000 householders are now in negative equity.

Lucian Cook, of Savills residential research, called for a serious cut in interest rates.

He also criticised this week’s package of measures designed to help the housing market, including a temporary raising of the Stamp Duty threshold to £175,000 ¬– a measure now widely thought to be of more help to property investors than first-time buyers.

He said: “Our reaction was lukewarm at best. By contrast, a serious cut in interest rates, fed through to reduced mortgage costs, would begin to address the issues which are really blighting the market.

“While we recognise that inflationary factors make a meaningful cut unlikely in the foreseeable future, from the perspective of the housing market this is desperately needed, both to stimulate activity and ease the concerns of home owners.”