Hometrack: House price growth to slow to 4%

Tuesday, 29 May 2007 12:00 AM

House price growth is predicted to fall to four per cent across England and Wales this year.

That is according to Hometrack, which finds house price growth slowed to 0.6 per cent in May, seeing annual house price growth fall to 6.7 per cent.

Outside of London and the south-east (up 1.3 and 0.6 per cent respectively), house prices rose by no more than 0.4 per cent in May.

Regions seeing no price growth in May were Wales and the north-west, where house prices remained at £134,200 and £127,400 respectively. In the north, house prices were up 0.1 per cent to £111,100.

Looking at postcode districts, Hometrack finds the percentage seeing house price growth has fallen from 43.7 to 33.9 per cent from April to May.

Additionally, the property market analyst reports sales growth has slowed from April to May, supply has been increasing and the number of new buyers has not increased.

"The steady ratcheting up of interest rates was bound to take its toll eventually," commented Richard Donnell, Hometrack's director of research.

"We expect the headline rate of growth to slow relatively quickly over the rest of the year towards four per cent as affordability pressures put a continued squeeze on purchasing power and more supply comes to the market.

"The expected slowdown will be exacerbated by any further increases in interest rates above the current 5.5 per cent."

Hometrack noted the growth in supply was down to vendors, primarily in London and the south-east, "looking to cash in on strong market conditions".

"This increase comes at a time when there are signs of wavering demand in the face of higher interest rates. And it raises the question as to just how saleable these properties will prove to be," Mr Donnell warned.

Tags:
• uk property news