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UK House Prices Situation at 22 6 2007: Price growth slowing nationwide
UK House Prices Forecast: Growth continuing to slow, falls in some areas
Halifax Figures Confirm Slowdown
New figures from the Halifax confirm that house price inflation is slowing significantly. The UK average house price increased by only 0.3% in May, according to Halifax - down from 0.9% in April and below their forecast 0.5%.
Commenting on the figures, Howard Archer, Chief UK Economist at Global Insight said that "…the very real possibility that interest rates could reach 6 percent before the end of the year is likely to act as a significant deterrent to many potential house buyers."
New Model Highlights Impact Of Interest Rate Rises
A new mathematical model developed by a team at Reading University has highlighted the link between interest rates and house prices.
The model suggests that a 1% rise in interest rates will result in a 3% fall in average house prices. Given the current slowdown in house price inflation and the level of recent interest rate rises, this projection seems quite plausible.
The model was developed for the National Housing and Planning Advice Unit and also shows that a 1% rise in housing supply might result in a 2% fall in average house prices.
Housing Costs Take 18pc of Gross Household Income
A new report has shown that the average household now spends more than 18% of their gross income on housing costs, primarily mortgages. The last time that household expenditure on housing was this high was in 1990, shortly before the last house price crash.
According to the Office of National Statistics, while average house prices in the UK have risen by 204% in the last 10 years, wages have only risen by 94%, on average. This highlights the growing affordability problems faced by so many homeowners, especially first-time buyers who often have little or no deposit with which to reduce their borrowing requirement.
House Prices Forecasts and Predictions to 25/5/07
House Prices Forecasts and Predictions to 8/6/07
House Prices Forecasts and Predictions to 15/6/07
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