UK housing market shows further signs of cooling
Further signs that the housing market may be about to enter a "double dip" downturn emerged yesterday when the Nationwide said property prices rose by just 0.1 per cent in June.
The trend in house price inflation is clearly down: prices rose by 1.1 per cent in April and by 0.5 per cent in May.
Having seen housing supply artificially constrained last year by banks and building societies allowing borrowers in arrears to stay in their homes, and demand for mortgages heightened by the Bank of England's slashing of interest rates and monetary boost, this year will see a reversal of the mini-boom that saw property values rise 6 per cent during 2009. The tough Budget, rising unemployment, lower confidence and cautious banks seem certain to dampen the market for the foreseeable future.
Martin Gahbauer, the chief economist at Nationwide, said: "Barring a significant pick-up in house prices over the next few months, the annual rate of inflation should continue to drift lower in light of the very strong price increases recorded during the summer of 2009."
Howard Archer, the chief economist at IHS Global Insight, added: "The marginal house price rise in June adds to a recent flurry of soft data on the housing market and further fuels our belief that prices will struggle to make significant gains over the coming months, and may very well be only flat overall through the rest of the year."
Property prices have risen about 12 per cent since a low point in 2009 to stand at an