THE Bank of England left interest rates on hold at 5 per cent yesterday, disappointing millions of homeowners who had been hoping for a cut. At the same time it emerged house prices had fallen further last month, dropping another 1.7 per cent.
The government also made no decision over proposals to let homebuyers delay stamp duty, with the Treasury claiming that a "number of options" were being looked at.
The future looks bleak for mortgage lenders and homeowners alike, with property pr
ices returning to the same level as in June 2006, reflecting an 8.8 per cent drop on an annual basis. The average UK house price has fallen to £177,350, according to the Halifax, Britain's largest mortgage lender.
Peter Bolton King, the chief executive of the National Association of Estate Agents (NAEA), said uncertainty over a possible "tax holiday" could hit sales, and he added: "This uncertainty is a very, very dangerous thing – just to make a comment without backing it up in what is a very delicate market.
"Although we have called for a stamp duty holiday, I wish he hadn't said it."
Experts also predicted there would be more house price falls to come.
Tony Perriam, the director of residential sales at Rettie and Co, said: "The latest figures reveal a continuing trend. We are going to be in this situation for the next 16-18 months.
"I can't see the market recovering until 2010, unless there is external government intervention."
But he added: "In Scotland the middle to upper end of the market is holding up well."
