House price inflation could shrink to 5%


Thu 16th Aug, 12:28:54 BST

Rising interest rates and the continuing problems of affordability being faced by homebuyers could cause the rate of annual house price inflation to fall by as much as 50 per cent over the next 12 months.

Currently the annual rate of growth stands at 12 per cent, according to the latest figures from the Department for Communities and Local Government (DCLG).

However, a new report from the website Propertyfinder predicts that this could fall to five per cent over the next year.

Warren Bright, the website's chief executive said: "The housing market remains resilient , although interest rates have had a cooling effect on price growth and the full impact is yet to feed through into data.

"Changes in consumer attitudes are the first indicator of market conditions to come so we should expect house price inflation to continue to slow."

Of the homeowners questioned as part of the study, 82 per cent felt that increased interest rates would be the major factor behind such a decline, while 46 per cent also cited a shortage in housing supply as a reason for the expected slowdown.

House prices rose by 12.1 per cent from a year earlier in June, according to the DCLG, up from 10.8 per cent in May, representing the highest rate of growth since March 2005.

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