Assetz® News - Help this week

Help this week

1st September 2008 |

Those looking for news that could boost the UK property market will be keen to see what September brings, after an August in which the Bank of England's monetary policy committee (MPC) held the base rate again and house sellers expressed dismay at the government's refusal to confirm or deny that plans to change stamp duty were afoot, leading to fears that buyers will just sit on their hands until the truth is finally revealed in November.

The expectation that the new month will bring a change in interest rates is a nonexistent one. Last week an Adfero poll of nine experts found unanimous agreement that the Bank of England's monetary policy committee (MPC) will announce another decision to hold the base rate at five per cent on Thursday. This view was also shared by all 67 economists quizzed by Reuters.

What the Reuters poll also found, however, was that nearly half (33) of the economists anticipated a rate cut by the end of 2008, compared with 24 out of 59 a week earlier, while median forecasts suggested that by the middle of next year the base rate will be as low as 4.25 per cent and down to four per cent by the end of 2009.

So for investors hoping to see the price of borrowing coming down, the best hope may be that the coming 12 months will see the MPC taking significant action as inflationary pressure subsides and the economic slowdown further diminishes upside influences on the consumer prices index.

On the other hand, other moves to potentially help the housing market may be brought in this week. Days after chancellor Alistair Darling produced an uproar by suggesting in a Guardian interview that the economy faced conditions that are "arguably the worst they've been in 60 years" and described the electorate's verdict on the government's handling of the economy in somewhat industrial language, the government is reportedly about to announce two new proposals on the issue.

According to reports, Mr Darling will join prime minister Gordon Brown and communities secretary Hazel Blears in a joint announcement of two new policies. One will be a deal worked out with the Council of Mortgage Lenders to see repossessions reduced by making the option a strict last resort for lenders. The second will be an extension of the Homebuy scheme under which first-time buyers can part-buy a home on a shared equity basis. It will hope that the first move will restore confidence among those taking out mortgages that their risks are less, while the second may encourage more new buyers to emerge.

But these may be just the first of a series of different policy announcements across the political spectrum this autumn. With the conference season approaching and the government keen to restore its fortunes, there may be more to come from Mr Darling and Mr Brown, while the Conservatives and Liberal Democrats could also use their week in the limelight to announce their own proposals.

Beyond this will come November and the pre-budget statement, with the announcement (or not) about stamp duty, plus other possible liquidity measures based on the findings of the Crosby report. The MPC may not offer anything new just yet for property buyers, but others will have much to say and do.

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