Nationwide: house price growth slowing
Thursday, 30 Aug 2007 11:28
Nationwide: house price growth slowing
Although August witnessed a small upturn in house price increases the annual rate is continuing to moderate.
According to research released today by Nationwide prices increased 0.6 per cent in August, up from just 0.1 per cent in July.
However, the annual rate of increase fell from 9.6 per cent; down from 9.9 per cent in July.
Nationwide now calculates the average house in the UK costs £183,898, up by £16,177 from the same period in 2006.
"The US sub-prime crisis has created turmoil in international financial markets, but this is unlikely to have a significant additional effect on the rate of growth of house prices in the UK in the short term," commented Nationwide's chief economist Fionnuala Earley.
The building society expects house price increases to fall to between five and eight per cent before the end of 2007.
Growth is slowing for three main reasons:
Weak affordability: house prices have continued to grow faster than earnings, pushing property out of reach for many.
Higher interest rates: pushing up the cost of mortgages and compounded by inflationary pressure.
Lower house price expectations.
Ms Early concluded: "While it has taken some time for these factors to bite, there are now clear signs of slower demand in the market reflected in the collapse in new buyer enquiries.
"In addition, the stock-to-sales ratio, which leads house price inflation by five to seven months, predicts a continued slowing in the annual rate of house price inflation."