UK house prices rise at slowest pace in a year, Nationwide says

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LONDON — British house prices rose in July at the slowest monthly pace for a year and the market is expected to slow further as pressure on the cost of living tightens and the Bank of England continues to dodge raise interest rates, mortgage lender Nationwide said Tuesday. .

Home prices last month were 0.1% higher than in June, when they rose 0.2%. It was the smallest increase since July last year and was below the median forecast in a Reuters poll of economists for a 0.3% increase.

In annual terms, prices were 11.0% higher than in July 2021, after growing 10.7% in June, but weaker than expected by all economists in the Reuters poll.

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Robert Gardner, Nationwide’s chief economist, said the housing market had been surprisingly buoyant so far, given strains on household budgets and consumer confidence falling to a record low.

“We continue to expect the market to slow as pressure on household budgets intensifies over the next few quarters, with inflation expected to reach double digits towards the end of the year,” Gardner said. .

Higher BoE interest rates would also cool the market if mortgage rates rise accordingly, he said.

The UK property market has shown signs of cooling after the surge in demand for larger homes during the COVID-19 pandemic, which was boosted by a now expired homebuyer tax cut.

BoE data last week showed the lowest level of new mortgage approvals in June in two years and banks and building societies are bracing for the biggest drop in demand for mortgages since the mid-2020.

The BoE has raised interest rates five times since December as it tries to cope with soaring inflation and it is expected to raise borrowing costs further on Thursday, with the size of the hike the only question for investors.

(Writing by William Schomberg; Editing by Kate Holton)


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