August growth up but longer-term trends less positive

House price growth rose in August but is likely to remain lower for the rest of the year due to a variety of factors, the latest Nationwide House Price Index has shown.

Nationwide reveals that a jump in price growth from 0.1 per cent last month to 0.6 per cent in August was not enough to prevent the annual rate falling from 9.9 per cent to 9.6 per cent.

The lender added that while interest rates were likely to remain at 5.75 per cent for now, the longer term effects of current financial market difficulties were unknown.

"The expected slowing results from three main factors, each of which have been around for some time," commented Nationwide's chief economist Fionnuala Earley.

"First, weaker affordability, as house prices continue to grow more quickly than earnings; second the effect of higher interest rates and inflation on consumers’ pockets; and third lower house price expectations," Ms Earley explained.

Earlier this week Hometrack reported that property prices remained unchanged in August because of such affordability issues.


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