UK house price growth slowed more than expected this month after a series of interest-rate increases raised the cost of mortgages.
Nationwide Building Society said prices grew 0.3% in June to £271,613 ($330,000), less than the 0.5% gain that economists had expected. The annual pace of growth eased to 10.7% from 11.2% in May.
“There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer inquiries,” said Robert Gardner, Nationwide’s chief economist.
The Bank of England has lifted interest rates steadily since December to quell inflation, which has reached a 40-year high. With policy makers signaling more increases in the months ahead, economists expect a slowdown in the property market, which remained buoyant throughout most of the pandemic recession.
Unemployment near a 50-year low along with a shortage of properties on the market is likely to support prices from an outright decline. But the market is likely to cool as consumer finances are squeezed by surging inflation.
“The Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates,” Gardner said.
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