House price inflation set for sharp slowdown

House price growth will fall to low single digit figures next year on the back of lower wage growth and more restrictive lending conditions, Nationwide has suggested.

The building society predicts that current problems regarding the extension of credit will cause problems for the property market once lenders are forced to pass on such costs, Nationwide economist Fionnuala Earley told the Reuters news agency.

However, despite such predictions, recent think tank research has forecast that prices would continue to rise in the long term, with the average price predicted to pass £450,000 in the next 20 years according to the Centre for Economics and Business Research.

But Ms Earley warned that price growth would fall in the short term.
"We expect house price inflation to be no higher than wage inflation next year, so we are talking about low single digits," she told the news agency.

House price growth for August stood at 0.6 per cent, according to the latest figures from Rightmove.

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