Skip Ribbon Commands
Skip to main content

News Release


UK Base Rates left unchanged at 0.50%

Jones Lang LaSalle comment

London, 8th October 2009 - The Bank of England kept interest rates on hold at 0.50% today for the seventh consecutive month. The minutes of last month’s Monetary Policy Committee (MPC) meeting showed that all nine members of the MPC voted unanimously to keep base rates at a record low of 0.50% and continue with its quantitative easing (QE) programme at £175 billion.

UK Residential Property

James Thomas, Head of Residential Development and Investment at Jones Lang LaSalle, commented:
“House prices increased by 1.0% in September according to Nationwide, the seventh consecutive month of positive growth, with average prices having now returned to those seen a year ago. Improved sentiment and a lack of properties available for sale have been the key drivers of recovery combined with demand in London from overseas purchasers attracted by the weakness of sterling.”

“Our view is that the current upward trend in house prices is unsustainable and that prices are likely to contract by a further -7% during 2010.  The prospects for house prices going forward will be dependent on the speed of economic recovery and will be heavily influenced by constrained credit conditions and the impact of rising unemployment.”

UK Commercial Property

Paul Guest, Head of EMEA Research at Jones Lang LaSalle, said:
“Investor confidence in commercial property continues to improve and this is feeding through to rising prices as an increasing pool of investors from both inside the UK and around the world compete for the limited amount of prime stock that is on the market at the present time. This investor demand has spread across the various property types and the UK institutions and property companies are now in the market looking to buy. We expect commercial property to generate positive returns for the remainder of 2009.”
 “We would caution investors, however, that the occupational market conditions favour the tenant with rents continuing to fall across many markets, vacancies high, incentives high and over-renting a major feature of the market. Safeguarding income will be crucial in out-performing in a market where investor confidence may well run ahead of the underlying economic drivers of performance.”
 “Tenants are not necessarily well placed to take advantage of current conditions as the economic turmoil has left them in a position of defensive demand; that is they are making use of breaks and expiries to drive down costs through lease re-gears and/ or exit surplus buildings. Their decision making is still predominantly focused on the ability to reduce costs, optimise capital and / or differentiate between core and no-core operations, geographies and headcount. The market ramifications of this are low levels of take-up, sluggish demand and tenant led supply.”