House Price Inflation Slows in August
U.K. house price inflation slowed in August in new figures reported by the Nationwide Building Society.The cost of a home rose 9.6 percent from a year ago after a 9.9 percent gain the previous month. Prices average £183,898 pounds, up 0.6 percent from July, which compares with a 0.1 percent increase in June.
Higher borrowing costs made it more expensive for consumers to repay the record 1.3 trillion pounds of debt they shoulder. Losses on subprime mortgages in the U.S. have tightened lending standards around the world and may restrain demand for homes in the coming months, today's report said.
"There are now clearer signs of slower demand,'' Fionnuala Earley, chief economist at Nationwide, said in a statement. "The overall extent of any damage to economic growth and hence the housing market will depend on the length of the credit crunch and the monetary policy response by the Bank of England.''
Nationwide's figures reinforce other reports suggesting the housing market is cooling in the U.K. Hometrack, a property research company based in London, said prices stagnated for the first time in 20 months in August. Rightmove Plc, the nation's biggest property Web site, said prices fell for the first time in a year in London this month.
Investors are still betting the Bank of England will raise its benchmark rate, now 5.75 percent, once more to keep inflation at the 2 percent target after U.K. economic growth quickened in the second quarter.
Nationwide forecasts annual house price growth will slow to between 5 percent and 8 percent this year as consumers balk at stretching their finances to buy a new home.
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