Property prices in the UK rose at their slowest rate for months, according to the UK’s two biggest lenders. But despite fresh concerns that the global economic slow- down has sapped the market’s momentum, both lenders remain confident there will not be a return to the boom and bust situation of the late 80s and early 90s.
According to Nationwide, the monthly increase in July was only 1.1%, down from 1.9% in June, and the average house price was £89,962. Although this is a significant decline, Alex Bannister, group economist at Nationwide, remains optimistic that this does not prelude a collapse.
‘Price growth has surpassed expectations during the first seven months of the year and we have been carefully monitoring our forecast for house price growth over the last month or so. Our current forecast of 7% made in January, was made on the premise of house price growth in London and the south east slowing to a more sustainable rate during the year. While price growth in much of the UK is sustainable, there is no evidence that the London and south-east markets are set to slow despite our expectation that the economy will weaken in response to eroding consumer confidence,’ said Bannister.
Halifax also reported a slowdown with a rise of only 0.7%, the lowest increase since January, but despite this the lender also predicts slower growth over the remainder of the year rather than a collapse in prices.
Martin Ellis, group economist at Halifax, said: ‘The UK economy is not isolated from the deterioration in world economic conditions and there are signs that the difficulties faced by manufacturers are spreading to the rest of the economy. Slower economic growth is likely to curb housing demand and cause house price inflation to ease over the coming months.’
The latest report from the Royal Institute of Chartered Surveyors (RICS) is pessimistic with just 32% of chartered surveyors expecting prices to continue to rise.