House price growth shows signs of slowing

Annual house price growth is showing signs of abating after May witnessed a 0.5 per cent rise, compared to a 0.9 per cent rise in April, according to the latest statistics on house prices from Nationwide.

The Building Society calculated that the annual growth rate stands at 10.3 per cent, as of May. The average house price is currently estimated to be £181,584, almost £17,000 more than prices in May 2006.

Although prices have risen by an average of £1,000 since April, there are signs that the housing market is slowing down. The three-month growth rate was 1.8 per cent in May, the lowest posted since last August.

"Higher interest rates clearly present risks to the housing market, but providing the economy, and particularly the labour market, remain in good shape, we should still be able to expect a measured cooling," said Fiannuala Early, chief economist at Nationwide.

She went on to explain that the May rates rise and expectations of at least one more possibly in June would "dampen demand and buyers' expectations of further house price growth" during 2007, contributing to the deceleration of house price growth.

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