House price growth dips in July
House price growth is slowing due to rising borrowing costs, analysts say
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Wednesday, 29, Aug 2007 01:11
The rate of house price growth dipped in July, easing to the slowest pace in a year, according to official government figures.
Property prices in England and Wales climbed by just 0.1 per cent last month, the lowest rise recorded since June 2006, the Land Registry data shows.
The modest monthly rise compares to an increase of 0.4 per cent recorded in June this year, while the annual rate of house price inflation stood at 8.8 per cent.
In July, the average price of a property in England and Wales stood at £181,460.
The Land Registry said London was continuing to lead the rest of the country in terms of house price growth, with prices in the capital up by one per cent over the month, bringing the annual rate of property price inflation in the city to 10.5 per cent.
Last month saw London house prices outstrip those across England and Wales by six per cent or more for the fourth consecutive month, with the average cost of a home there standing at £342,936 in July.
Analysts have interpreted the figures as a further sign that the housing market is beginning to cool in the wake of the five interest rate rises introduced by the Bank of England in the year to July.
Previous commercial house price surveys for July have also signaled a slowdown, while research published earlier this week showed that prices have continued to slow in August. Housing intelligence business Hometrack said property prices across the UK remained flat this month, recording the weakest monthly change since November 2005.
Those within the property industry are now warning that the housing market may slow even further if monetary policymakers opt to raise the benchmark interest rate further in the coming months, with economists currently divided as to whether an additional quarter point rise to six per cent will be introduced.
"The housing slowdown continues to accelerate as homeowners and prospective buyers deal with the impact of five interest rate increases since last August, and the most stretched affordability conditions for more than 15 years," said David Stubbs, a senior economist at the Royal Institution of Chartered Surveyors.
"A difficult 2008 looms for the housing market, and will be made even worse if interest rates rise to six per cent in the coming months," he added.