House price growth has slowed down over the course of this month, a recent Rightmove study has revealed.
During July, the cost of property was reported to have risen by 0.3 per cent, half a percentage point down from the growth noted in the previous month and the lowest increase recorded so far this year. Overall, the typical home is now said to cost 240,000 pounds, compared to June's figure of 239,317 pounds. Meanwhile, the company indicated that over the year ending in July price inflation stands at 10.3 per cent, in comparison to the 13.2 cent noted in the 12 months leading up to June. The slowdown in growth was partially attributed to the Bank of England's monetary policy committee (MPC) increasing the base rate of interest three times thus far this year.
According to the company, house price growth in the capital is currently twice as fast as the rest of the country. Over the last 12 months, property in London has risen by some 21.7 per cent with Westminster, Camden, Chelsea and Kensington reported to be particularly driving growth. Outside of the English capital, the Yorkshire and Humber region was said to have seen the largest increases with homes up by 11.4 per cent during the past year. Meanwhile, the north and north-west have seen the lowest annual growth with increases of 5.9 and 5.1 per cent respectively.
Miles Shipside, Rightmove commercial director, said: "Shortages of supply will remain more acute in the capital, as suitable building land is harder to come by and demand will continue to grow as the City strives to become the financial capital of the world. The consequent upwards pressure on prices can be absorbed by highly paid City workers, but it exacerbates the existing problems for key workers and first-time buyers in London".
He added that despite moves by new prime minister Gordon Brown to provide access to homes for potential first-time buyers, those looking to get on to the bottom rung of the property ladder are still set to be faced with "limited choice in the 'affordable' sector".
Commenting on the figures, Howard Archer, chief UK and European economist for Global Insight, claimed that the study indicated that the housing industry is beginning to slow down "as demand is increasingly pressurised by the rising affordability pressures stemming from higher interest rates, modest real disposable income growth and elevated house prices". He added that there is a "very strong possibility" that the MPC is to increase the base rate to six per cent over the coming months. In turn, Mr Archer suggested that this could be a "significant deterrent" to many prospective property buyers as they struggle to make secured loan repayments.
Earlier this month, a study released by the Royal Institution of Chartered Surveyors showed that house price inflation halved over the course of June in comparison to May's statistics. Although the month was the 20th consecutive period of growth, only 10.6 per cent more chartered surveyors indicated house price rises, compared to those reporting a decrease. As the firm revealed that first-time buyer enquiries fell at their fastest rate since February, consumers are increasingly struggling to make secured loan repayments.
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