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News Release

London

UK Base Rates Remain Unchanged at 0.50%

Jones Lang LaSalle Comment


London, 5th November 2009 - The Bank of England has kept base rates on hold at 0.50% for the eighth successive month. The Bank has decided to extend its quantitative easing programme by £25 billion to £200 billion. The move was anticipated, given the unexpected contraction of third quarter GDP figure by -0.4%. In addition, growth in broad money supply was weak, where core M4* fell at an annualised rate of 1.7% in the third quarter, further supporting the need for QE extension.

UK residential property

James Thomas, Head of Residential Development and Investment at Jones Lang LaSalle, commented:

“Current market data suggests that the recent pick-up in house prices is likely to continue. House prices have now increased to levels higher than a year ago for the first time in 19 months. Nationwide reported that house prices in October were 2% higher than the same month last year, with house prices now averaging at £162,038.”

“More positively, according to the Bank of England, mortgage approvals rose to the highest level since March 2008 rising by 3,000 in September to 56,000. Although this is still much lower than the monthly average level of 95,000 recorded between 1993 and 2008, the increase is a positive sign which supports the recovery in the housing market.” 

UK commercial property

Paul Guest, Head of EMEA Research at Jones Lang LaSalle, said:

"Recent global surveys point to an increase in tenant confidence with many now starting to consider growth strategies as we move out of recession across certain markets. That said, the economic conditions are such that caution, cost containment and consolidation will still be the order of the day. Structural demand will continue to come through the markets but levels of re-gearing and the opportunity to sweat portfolios harder is still resulting in low take-up activity."

“Investor confidence in commercial property continues to improve as prices and valuations continue to rise with the market delivering the first positive total returns since Q2 2007 over the last quarter. The scale of investor demand has led to a broadening definition of ‘prime’ and prospective buyers are now looking at properties which they would not have considered just months ago."

“Whilst we still expect commercial property to generate positive returns for the remainder of 2009 and into 2010, we would highlight that the economy remains weak and the exit from recession will prove to be a slow one. Given high vacancies and over-renting, performance will be delivered by accurate stock selection in a market where plenty of buyers are chasing limited properties.”