‘Stall’ Noted In House Price Rises
Keywords: House, price, grwoth, dies, down
Property prices “stalled” over the course of this month, new statistics reveal.
In research carried out by Nationwide, house prices increased by 0.1 per cent during July - the lowest rate of growth recorded since April 2006. Following three previous months witnessing double-digit increases, the latest figures were said to bring the annual rate of property inflation down to 9.9 per cent. Overall, the average British property is now reported to be worth 184,270 pounds - 200 pounds above June statistics and some 16,537 pounds higher than this time last year.
Fionnuala Earley, chief economist for the financial services firm, said: “After surprisingly picking up steam in June, house prices were almost unchanged in July and their underlying trend growth resumed a downward path” She claimed that the Bank of England’s monetary policy committee (MPC) now faces uncertainty on whether to increase the base rate of interest in coming months. Although house prices are slowing down as households are finding themselves under increased financial pressure, Ms Earley reported that the MPC could delay an interest rate hike as it continues to judge the effect of previous increases on public spending. However, the analyst stated that the base rate could yet increase to six per cent in the future as a result of rising retail sales and higher oil prices, despite there being a risk of “monetary overkill”.
Meanwhile, prospective property buyers were said to be becoming more financially aware of how the recent climate of interest rate rises could affect their ability to make mortgage repayments. The study indicated that as the proportion of disposable income has fallen over the last six months, consumers are said to be “thinking twice about overstretching themselves” before purchasing a home. Research from the firm also showed more borrowers are opting to take out a fixed-rate product to help keep their monthly outgoings consistent as the MPC is forecasted to raise the base rate further in the coming months.
Commenting on the study, Howard Archer, chief UK and European economist for Global Insight, said: “Affordability pressures have been magnified by the Bank of England’s lifting interest rates by a further 25 basis points to 5.75 per cent in July and there remains a very strong possibility that interest rates will rise to six per cent in the autumn, which is likely to act as a significant deterrent to many potential house buyers. Meanwhile, a substantial number of homeowners will see their mortgage bills rise markedly during the second half of the year as the cheap fixed-rates that they took out two years ago expire”.
Consequently, Mr Archer claimed that “growing affordability pressures” are making it evermore difficult for both prospective first-time buyers and existing homeowners to purchase a property and make secured loan repayments.
Earlier this month, a Nationwide study indicated that although values increased throughout the country between April and June, the rate of property price growth is slowing down. Over the course of the second quarter, the typical home rose by 2.1 per cent in comparison to growth of 2.3 per cent during the first three-month period of the year. The research also indicated that London and Northern Ireland were driving house price growth.
Steve Smith writes for 1 Stop Finance Shop. A one stop shop for all your bad credit loans, debt consolidation loans and loans news.Visit Today: news.1stopfinanceshopuk.biz
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