UK housing market predictions are showing a relatively stable start to 2006, especially with the Bank of England's (BoE) decision to keep interest rates on hold yesterday.
The BoE's Monetary Policy Committee decision to keep rates frozen at 4.5 per cent has caused mix reaction from the lending and housing sector.
Alliance & Leicester's head of intermediary mortgages, Mehrdad Yousefi, said although the decision was widely anticipated commentators predict that the housing market will continue to remain broadly stable in 2006.
"Brokers, homeowners and first time buyers can look at this year in a positive light with the possibility of future rate cuts bringing more favourable housing market conditions," he said.
However, chief economist at Lloyds TSB Trevor Williams said this month many will be left wondering why the MPC has decided to keep the lid on rates when manufacturing is in recession, economic growth is below average and retail sales are subdued.
Mr Williams said obviously the real deciding factor was the steady improvement in the housing market.
"Hopes of a recovery in consumer spending have been pinned on the housing market's return to health and the MPC will be keen to see the modest rise in property prices continuing. However, the trick for the Bank of England will be to stimulate a rise in house prices which is modest enough to help consumer spending but which prevent the return of a another boom that could be potentially destructive for the economy," he explained.Click here for more information on property
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