03 November 2008
A survey of members of the National Association of Estate Agents (NAEA), which asked their opinions on the effect of the recent bank bail-out, has produced over 1070 responses from estate agents across the country. The poll generated a resounding response suggesting that despite the injection of cash into banks, a swift interest rate cut next month is still needed to help bolster movement throughout the economy.
Over the past few days members were asked a series of questions relating to the recent government bank bail-out. The results clearly demonstrate agents’ strong feelings on how more needs to be done for consumers and businesses, including a sharp interest rate cut.
The NAEA first asked members ‘Do you believe the £37 billion injection of cash from the government will have a positive effect on the property market overall, as mortgages become more readily available?’ 37% of respondents stated ‘yes’ whilst 18% said ‘no’ and a further 45% believed it had ‘little impact’.
One member commented: “The bank bail-out has had limited effect as yet but has safeguarded the cornerstone of the economy.” Whilst one agent said: “Confidence is all important, the bail-out is a positive step, doing nothing is not an option”. Another stated: “I believe the bank bail-out had to be done, but it will take at least six months to see any improvements.” Another member echoed these sentiments stating: “…it will need time to ‘bed-in’”.
The general consensus was that it was too soon to tell whether this will have a dramatic effect on the market but overall members believed that: “Provided the bank bail-out provides stability, which early signs suggest that it has, then this will be a positive sign for the housing market.”
Other members made comments regarding the need for lenders needing to pass on interest rate cuts, as one member comments: “I feel the bail-out may help but only if banks start to lend again and relax their criteria.”
A further question then asked agents ‘when would you expect to see property prices beginning to rise again in your area?’ 3% responded with ‘0-6 months’, 18% said ‘7-12 months’, 35% stated ‘13-18 months’ and 44% answered ‘18 months and over’.
Finally, the NAEA asked members ‘Do you believe that the government should put into place further relief efforts to help stabilise the property market? A staggering 88% answered ‘yes’ whilst a meagre 12% said ‘no’.
One member urging for more help from the government simply commented: “Every little helps but more help is needed.” Another agent stated: “The second most important part of the economy (after banks) is the housing market. The government need to create a situation to encourage transactions to take place – as they create values, to which lending can be secured, a flow of funds to other parts of the economy will then follow.”
An agent explained: “The initiative to bail-out the banks must be matched with an equally focused and positive initiative to salvage the property sector. The housing market must be underpinned by a lower base rate (3.00%) linked to a proportionate standard variable mortgage rate.” Another agent advocates this stance saying: “The Bank of England needs to slash rates quickly to 3% or less.”
Other agents believe that more initiatives need to take place regarding Stamp Duty with the resolution of a stamp duty holiday still holding president.
Peter Bolton King, Chief Executive of the NAEA comments: “I’m relieved to see that the government has started to take decisive action with regards to unclogging the financial pipeline. The bail-out will go a long way to help steady the financial markets. However, the effects of this plan and investment will not deliver immediate results; it is a long term strategy, as many of our members comments have echoed. Short term relief needs to be made available. The government needs to take a more holistic approach and address the needs of the entire market; as ultimately this will help get the market moving again.
“A dramatic cut in interest rates next month would help bolster consumer confidence at a time where individuals’ self-assurance has taken a hit. We know that a positive housing market is essential for the overall economy. Reducing the rate will help send a clear signal to the market, encourage lenders to reduce their rates and allow fluidity of mortgages to be loosened giving the market and the thousands of house hunters out there the positive impetus they need.”