UK house prices rise more than forecast but slowdown anticipated

UK HOUSE prices rose more than expected in August, with estate agents reporting only a modest slowdown in the market despite the cost of living crisis.

Nationwide Building Society said the average cost of a home rose 0.8 per cent in August to £273,751 (S$444,353), the 13th consecutive monthly increase. A rise of just 0.1 per cent was forecast by economists. The annual pace of gains slowed to 10 per cent from 11 per cent.

Nationwide said a shortage of properties for sale was underpinning prices but warned that the slowdown was likely to continue as the pressure on household budgets intensifies, with inflation set to remain in double digits into next year.

“Moreover, the Bank of England is widely expected to continue raising interest rates, which will also exert a cooling impact on the market if this feeds through to mortgage rates, which have already increased noticeably in recent months,” said Nationwide chief economist Robert Gardner. 

Mortgage rates are now at their highest since 2016 after 6 interest-rate increases from the Bank of England since December, weighing on the affordability of property.

Consumers are also grappling with the strongest inflation in 40 years and an 80 per cent increase in electricity and natural gas bills due to hit in October. BLOOMBERG