Interest rates mean ‘mini-boom’ is over

Posted on 23 July 2007

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Five interest rate rises since last August have finally reined in property asking prices, according to Rightmove.

The property website’s monthly house price index shows that the average asking price in July was £240,001, a rise of only £684 from last month. The 0.3% increase over the month means that the annual growth rate has fallen to 10.3%, from 13.2% in June.

Commenting on the figures, Rightmove’s commercial director Miles Shipside said: “This is further evidence that the ‘mini boom’ is coming to an end. As long as employment remains buoyant, prices are likely to remain broadly at these levels.”

Rightmove’s figures suggest that the comparatively affordable homes typical of a first purchase are appreciating more quickly than other properties, adding to the pressures facing first-time buyers.

In apparent contrast to recent Land Registry figures, Rightmove says that flat asking prices are rising at double the rate of detached and semi-detached houses.

“New households are faced with limited choice in the ‘affordable’ sector that Gordon Brown has promised to create to help first time buyers get onto the property ladder. The result is increasing price pressure on the cheapest property types of terraces and flats, especially in the London market,” Shipside said.

“Building more affordable housing is the right solution, but the Prime minister’s revised target of 40,000 extra homes per year starting in 2016 is too little too late.”

Category: Mortgages, Property

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