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Interest Rates Hit House Prices
It seems rising interest rates have finally put pressure on the property market with house prices rising at their slowest rate for 5 years. Nonetheless, demand for houses still continues to exceed supply according to 2 recent surveys.
A survey by property website Rightmove found that asking prices are levelling out with their slowest rise in 5 years, suggesting the Bank of England’s interest rate tactics seem to be having the desired effect.
In previous years, the Rightmove survey has recorded price rises of around 2% in February – a time when the market traditionally starts to pick up after the Christmas break. For this year the figure was 0.9% compared to 2.6% in February 2006.
Overall this contributes to an average house price inflation of 11.5% compared to 13.5% in January – the sharpest drop in 18 months.
A Rightmove spokesman commented: “With three interest rate rises in the past six months and the looming threat of another, it looks like we have finally reached the point where the market is highly interest rate-sensitive.”
A recent report from propertyfinder.com seems to confirm the depressed market but threw up some interesting figures when comparing geographical locations. In the East Midlands for example, asking prices rose by 3.9% this month - the strongest house price inflation of any area in the UK.
A company spokesman added“We are at a crossroads and the path taken by those in charge of interest rate policy will dictate the direction of the housing market in 2007.”
www.businessinberkshire.co.uk/property
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