Assetz® News » HOME | RSS Feed FEED | LIST ALL ARTICLES | ASSETZ HOMEPAGE
Investment Property News from Assetz

Assetz® Property News Service

2007 house prices cool off

30th January 2007 | back to article listings BACK    print this article PRINT

The first indications of a slowdown in the housing market emerged today as new research shows that monthly house prices increased just 0.3 per cent this month, down from 1.2 per cent in December.

After a remarkable boom in the latter half of 2006 when the average house price increased by nearly £8,000 in the space of six months, homeowners and property investors alike saw a rather more muted start to 2007, according to Nationwide's January house price index.

Annual house price inflation is still running at a healthy 9.3 per cent but this is considerably down on December's 10.5 per cent, a fall that experts are attributing to the Bank of England's three interest rate rises in the space of six months.

Furthermore, with the consumer price index - which measures inflation - running at three per cent, a full percentage point above the Bank of England's target, it would be foolhardy to rule out a further increase in the short-term future.

Excessive demand coupled with a chronic deficit in supply was the primary factor behind the growth in house prices in 2006, but with interest rates currently at 5.25 per cent homeowners' wallets are being squeezed and potential first-time buyers are being warded off from investing at present.

Although Fionnuala Earley, Nationwide's chief economist, admitted that the rate rise "will reduce new demand to some extent" she emphasised "it is important to not overstate their impact" as there were a range of other factors pointing to a slowdown in the property market.

"Estate agents reported some easing of demand in December and January," she said. "The number of newly agreed sales is rising more slowly and the length of time properties are on the market seems to be getting longer.

"More importantly, new buyer enquiries recorded their first fall in 19 months.

"While the correlation with mortgage approvals is not perfect, it suggests that the 129,000 house purchase approvals recorded in November may have been the peak."

However, Ms Earley said that the main risk to the property market was people having a severe loss of confidence. Such a knee jerk reaction to the news of a faltering property market would cause more damage overall.

She added: "The more likely outcome is that the market will remain fairly stable but slow a bit more quickly than we initially expected."

As a result, Nationwide is revising its expectations for house price growth this year to the lower end of its five to eight per cent forecast.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3253.html. Alternatively, please see our full press release archive.

Assetz® is a UK and International Property Investment Specialist. Please visit our property sites shown below.

Assetz for Investors UK Assetz Hotels Assetz Homes Assetz International Assetz France Assetz Spain Assetz Cyprus Assetz Germany Assetz Portugal Assetz Ski Assetz Cape Verde Assetz USA Assetz Finance Assetz Fund Management

Accessing the news service

You can view all of the Assetz® UK, International and UK Property Investment Articles and News here.

We also provide an RSS Feed Feed of the news service, or you can view all articles. Click here to view more information on RSS readers and how they make reading online news more convenient.

eXTReMe Tracker