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News Release

London

UK Base Rates left unchanged at 0.50%


London, 13th January 2011 - In the first base rate decision of the New Year, the Bank of England maintained the base rate at 0.50%.  While this was in-line with consensus the differing views held by the monetary policy committee could see an eventful year for the base rate, with a wide variety of outcomes - further quantitative easing, a rise in the base rate or maintenance of the status quo.

UK residential property

Rob Bruce, Head of Residential Research at Jones Lang LaSalle, commented:  "The new year traditionally marks the start of a busier period in the housing market as would-be buyers weight up the opportunities of a pre-summer move.  Recent RICS data pointed to 6-months of declining buyer demand so a seasonal upturn will be welcome."

"Lending levels remained subdued at the close of 2010.  Bank of England data showed November lending down 18.6% year-on-year.  First-time buyers still face the toughest task, while competitive deals are returning for those with a large equity stakes in their property.  Consultation on the FSA's Mortgage Market Review is ongoing and we await the implications with interest."

"Nationally, expectations are for modest house price fall of 1% in 2011, on the back of lacklustre demand and tighter lending criteria.  In the London market, the weigh of international capital and buyers in a more cash-positive position are propping up nominal price growth of 2% in 2011, on current forecasts."

UK commercial property

Stephanie McMahon, Director UK Research at Jones Lang LaSalle, said:  "Despite two quarters of stronger GDP growth, the outlook remains mixed with limited growth anticipated in 2011. Fiscal tightening is beginning to undermine consumer and business confidence with UK retail sales expected to be down over the festive season. Inflation is likely to remain elevated as a result of increasing food and commodity prices and the hike in VAT will further obstruct growth prospects."

"Office take-up continues to be relatively stable but deals remain driven by lease events and portfolio churn. There is some expansionary demand from the Banking & Finance sector however overall; demand is cautious and dependent on economic recovery. Dwindling supply is beginning to drive rental growth and stability in most markets."

"The development pipeline is subdued and choice for those seeking high quality office space is becoming increasingly limited. Supply of poorer quality second hand space remains high in most markets and is available at significant discounts to prime space."