The Bank of England (BoE) has frozen the base rate at 0.5% for a sixth consecutive month and extended its quantitative easing programme with an additional £50bn to a total £175bn.

However, the recently revised first quarter gross domestic product (GDP) data shows that the recession is deeper than previously anticipated and second quarter GDP shows a further decline of –0.8%.

David Bexon, managing director of SmartNewHomes, said: “Today’s decision will support the many homebuyers who are now starting to re-enter the market, following increasing reports of rising house prices and signs of recovery.

“Demand for new homes has been improving since the start of the year but restricted lending has remained a barrier. However, as people sense the tide is turning for house prices and developers continue to do all they can to assist new home buyers, speculative interest is now translating into sales.

“ UK house-builders are finally seeing some light at the end of the tunnel, which is good news for the overall market. This week, Taylor Wimpey became the latest to announce increased orders and plans to press ahead with new schemes later in the year, following similar announcements from both Persimmon and Barratt Homes. While this does not herald a return to high-volume building, it goes some way to easing concerns over future supply and affordability.”

James Hyman, partner for residential sales at Cluttons, added: “The considerable improvement in the market witnessed over the past months is a direct result of a lack of supply in central London and an increase in demand. Buyers and sellers are now very carefully tracking the market and good prices are being achieved. However, interest rates at this level have little bearing on the market where lending at any reasonable rate and loan to value is suspended. The market could quickly turn to a buyers market in the later in the year if unemployment rises again in the city, so anyone able and willing to move should take advantage of the current conditions.”