Rate cut galvanises housing market

The number of people looking to buy a new house rose following the Bank of England's recent cut in interest rates, research showed today.

Around 16% of people said they planned to move house within the next two years following the cut, compared with 13% immediately before it took place, according to Alliance & Leicester.

This gave an average of 15% of people in July who said they were looking to buy a new home within the next 24 months, the highest level for two years, and up on the 12% who were planning a move in the spring.

People in their 20s were most likely to be planning a move, with 30% hoping to buy a new home in the next two years, up from 25% last summer when the property market was booming.

This contradicts a report issued by building society Nationwide earlier this week, which said that the number of first-time buyers had fallen to its lowest level in 20 years, as increasing numbers were being priced out of the market.

Alliance & Leicester said the figures suggested the housing market remained robust, despite slight price falls in some regions.

"Even without the fall in base rate, the proportion of people looking to move over the next two years rose this quarter," said Paul Cooper, head of mortgages at Alliance & Leicester.

"This shows that people are confident that buying property is still a good investment. We haven't seen this many people planning to move since the summer of 2001, when the FTSE was above 5,500 points and before the events of September 11.

"This is certainly a good sign for homeowners, despite warnings of a housing market slowdown."

The need for independence was the most common reason for wanting to move, cited by 21%, while around 13% of people said they wanted to move to make money on their property, up from 9% in the spring.