Nationwide notes cooling house price growth

01 June 2007
A run of quarter-point interest rate hikes may finally have fed through to house price growth, the latest property figures from the Nationwide building society suggest.

The housing market is at last showing signs of cooling, witnessing just a 0.5 per cent average price increase in May, Nationwide chief economist Fionnuala Earley commented.

Affordability issues are still acute, she acknowledged, with the average house now costing £182,000, almost £17,000 more than at this time last year.

But underlying growth rates are falling, she explained, with the result that homebuyers may soon start to find constraints on their ability to buy begin to ease.

Nevertheless, Ms Earley predicted one further rate rise this year, with the Bank of England's Monetary Policy Committee reportedly still in 'hawkish' mood.

In the light of past and potential future rate rises, homebuyers should be wary of "stretching themselves to get a foot on the ladder", she urged.

Meanwhile, affordability issues could be worsened by a "drastic shortage of properties", the National Association of Estate Agents' spokesperson Richard Copus this week told Radio Five Live's Wake Up To Money programme.

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