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House Prices Stall - Torygraph

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:lol: Bank risks 'overkill' after house prices stall

By Richard Blackden, Online City Editor

Last Updated: 1:27pm BST 26/07/2007

House price growth stalls in July

Growth in house prices almost stalled this month, prompting a warning from the mortgage lender Nationwide that the Bank of England risks "overkill" on interest rates.

Prices edged up just 0.1pc this month, down from 1.1pc in June, as the Bank's five interest rates rise begin to take their toll, according to the latest survey from Nationwide. The slowdown pushed the annual pace of growth down to 9.9pc.

Having raised interest rates to 5.75pc, many City economists still expect the Monetary Policy Committee to hike borrowing costs to 6pc. The report from Nationwide adds to the evidence that the heated market is at last beginning to cool.

A report from Rightmove showed that prices climbed just 0.3pc this month, while the Royal Institution of Chartered Surveyors also reported that house-price growth was at its weakest in more than two years.

advertisementThe Nationwide's chief economist, Fionnuala Earley, said: "The sharp slowdown in July's house price numbers could show that potential homebuyers are thinking twice about overstretching themselves in a higher interest rate environment."

Ms Earley added: "When the effects of inflation over this period are added, the squeeze on finances becomes even more acute and further highlights risks of monetary overkill."

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