Interest rates were left at 5.75 per cent yesterday, as members of the Bank of England’s monetary policy committee decided risks of an economic turndown were not serious enough to warrant a cut. Business reaction was positive, but the National Association of Estate Agents (NAEA) criticised the decision saying ‘customers are crying out for reassurance: many housing market reports…indicate the housing market is slowing down on a monthly basis…’ Most economists believe the ecomony will slow more than the Bank wants and predict an interest rate cut as early as December.
In a busy day for NAEA, the association also launched a tirade against home information packs (Hips), saying they are continuing to distort the market, with fewer larger houses for sale than is usual for the time of year. More than three quarters of estate agents questioned said that instructions for three-bedroom plus houses was down more than 10 percent; and nearly half of them had seen a drop of more than 30 per cent. However a spokesperson at Communities and Local Government rejected the figures, saying that far wider issues, such as interest rates, have had a greater impact instead.
The National Audit Office (NAO) has criticised the North of England’s Pathfinder scheme, saying it has had little impact and has heightened the stresses of those living in the areas. The £2.2 billion plan was supposed to address the problems of neighbourhoods with poor housing stock and longstanding deprivation. Instead, of the 10,000 homes demolished and 40,000 refurbished, only 1,000 houses have been built in the nine Pathfinder areas of the North. Many of the residents, who were forced to move from their homes under the compulsory purchase orders, found that there was a £35,000 shortfall between the compensation they received and the amount needed to buy an alternative domicile.
Following the latest flood warning to the east of the country, the Environment Agency (EA) has announced that local authorities gave the go-ahead for 13 major developments including housing, caravan parks, and roads, to be built in areas of the highest floor risk last year – against their advice.
The US economy is heading for meltdown as a result of the collapse of the subprime mortgage market. Financial institutions collectively owe $1 trillion worth of subprime debt; nearly a year’s supply of unsold houses stand vacant; house prices are expected to fall up to 10 per cent next year, and housebuilding will contract by 50 per cent in the next two years potentially wiping out 1 to 2 million jobs. The US government and Federal Reserve believes that the housing slump on its own will cut US growth by 1-1.5 per cent and slow the economy to around 2.5 per cent next year.