House price growth "sluggish"

01 June 2006
Nationwide Building Society has released its house price figures for May, stating that growth has slowed considerably for the second month in a row.

Annual house price growth remains below five per cent and prices grew by only 0.2 per cent this month, only 0.1 per cent higher than the similarly low figure that was recorded in April.

Nationwide reports that the higher money market interest rates are now beginning to have a knock-on effect with mortgage costs.

"House price growth was sluggish for the second month in a row with prices rising just 0.2 per cent in the month, marginally up on the 0.1 per cent increase in April but down significantly on March's strong 1.1 per cent gain," said Fionnuala Earley, Nationwide's group economist.

"The annual rate of house price growth slowed slightly in May to 4.7 per cent," she continued.

"The price of a typical house in the UK is now £164,632, almost £7,500 more than at this time last year. This is equivalent to a price increase of just over £20 per day over the last twelve months."

Ms Earley also added that although there had been much talk of house price inflation recently, the facts pointed to a dampening of demand for mortgage products as the rising money market interest rates would put prospective buyers off for the time being.

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