Nationwide sanguine over surprise peak in house price growth

28 June 2007
House price growth in June was twice as fast as in May, Nationwide house price statistics reveal, with 1.1 per cent growth compared to just 0.5 per cent the previous month.

This rate of growth marked a six-month high and meant that prices in June increased twice as fast as at the same time last year.

The average house gained value by around £50 a day, Nationwide found.

But in spite of the quickening growth, Nationwide is standing by its prediction that total house price growth for the year will stand at between five and eight per cent.

Property market analyst Howard Archer of Global Insight agreed that "not too much should be read into June's marked rise", given that "house prices can be very volatile on a month-to-month basis".

But the spike in growth figures does make it more likely that the Bank of England will raise interest rates by 0.25 per cent, he added.

With the Monetary Policy Committee due to meet next week, Mr Archer noted it was a "very real possibility" that interest rates could rise to six per cent by the end of the year.

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