UK house price inflation accelerated less-than-expected in July, after easing in the previous three months, survey results from the Nationwide Building Society showed on Tuesday.
The house price index logged a double-digit annual growth of 11.0 percent in July, faster than the 10.7 percent rise in June. However, this was slower than the economists’ forecast of 11.5 percent.
On a monthly basis, house prices edged up 0.1 percent in July, following a 0.2 percent rise in the previous month. This was the twelfth successive monthly increase.
The average price for a UK home stood at GBP 271,209 in July compared to GBP 271,613 in the previous month.
The housing market has maintained a surprising level of momentum despite rising inflation, which has already driven consumer confidence to its lowest point ever, data showed.
Demand for properties continued to be underpinned by robust labor market conditions. At the same time, the limited stock of homes on the market has helped keep upward pressure on house prices.
“We continue to expect the market to slow as pressure on household budgets intensifies in the coming quarters, with inflation set to reach double digits towards the end of the year,” Robert Gardner, Nationwide’s Chief Economist, said.
“Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates,” said Gardner.
While limited stock has supported pricing so far, it is just a matter of time before deteriorating demand causes house prices to fall, Capital Economics economist Andrew Wishart, said. The economist forecasts a 5 percent drop over the next two years.
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