Housing market set for slowdown
Published On 23 July 2007
The housing market in the UK is set for a slowdown as the effects of recent interest rate rises start to be felt.Figures released by Rightmove indicate that the five increases to the base rate since last August are already starting to take their toll on the so far booming property market.
The company's house price index showed an increase of just 0.3 per cent on average asking prices between June and July of this year.
In addition, the annual rate of growth declined from 13.2 per cent to 10.3 per cent, with price increases in the capital continuing to outstrip the rest of the country by around double.
"This is further evidence that the 'mini boom' is coming to an end," said Miles Shipside, commercial director of Rightmove.
Prices will remain at this level if employment continues to be "buoyant", he added, but "depending on local supply and demand, sellers are going to have to duck and weave with their asking prices, especially if there is another rise in interest rates".
The Bank of England increased the base rate to 5.75 per cent earlier this month. The latest Ernst & Young Item Club report urged the monetary policy committee to take a balanced approach to the economy and to consider carefully potentially "damaging" interest rate increases.
