Property price rise slows down

BRITAIN’S house prices cooled only slightly last month, a key survey showed last Thursday (1), but remain vulnerable to rising interest rates and the cost of living crisis.

The average value of a home in Britain rose 10 per cent to £273,751 in August from a year earlier, home-loans provider Nationwide said in a statement.

Annual growth remained in double digits with the average property costing £50,000 more than two years ago.

Yet that marked a modest slowdown from 11-per cent expansion in July.

Nationwide warned the housing market would slow further on soaring domestic energy bills and rising interest rates.

“There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer inquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels,” said Nationwide economist Robert Gardner. We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation set to remain in double digits into next year.”

Consumer price inflation rocketed in July to a 40-year peak of 10.1 per cent, worsening a cost-of-living crisis as Britain faces recession.

Analysts at Goldman Sachs have forecast that inflation could hit 22.4 per cent next year under a worse-case scenario, if domestic energy prices continue to rocket.

The Bank of England last month hiked rates by 0.5 percentage points, the biggest hike since 1995, taking borrowing costs to 1.75 per cent to tackle runaway inflation.

Rising interest rates drive up mortgage repayments for households but boost savers.