Interest rates 'affecting prices but not demand'

Five interest rate rises in six months have hit price growth but not buyer demand across the market as a whole, the latest study from Haart estate agents has revealed.

The firm's latest report shows that price growth fell from an annual figure of 6.59 per cent in February to 5.46 per cent in August, though 43 per cent of agents said they now had more buyers on their books than they did three months ago.

These buyers were however now more cautious on price, the study noted.

By contrast, first-time buyer demand fell, 60 per cent of agents reported, though this is expected to increase over the next quarter due to the predicted period of interest rate stability.

“Following a prolonged period of extremely buoyant growth, house price inflation has begun to slow across the UK, as the succession of five interest rises since last August begins to take effect," commented Haart chief executive Paul Smith.

"With buyers now increasingly price sensitive, sellers have lowered their expectations on achievable price," Mr Smith added.

Last week Nationwide reported that annual price growth fell from 9.9 per cent in July to stand at 9.6 per cent in August.


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