House prices up despite the rate rises and pessimists
The latest house price figures from Nationwide Building Society show that they are still going up, despite three rises in interest rates since last August.
Prices rose 0.9% in April, compared with 0.5% in March, taking the annual rate of house price inflation to 10.2%, despite gloomy forecasts from bodies like the International Monetary Fund. The average house price in the UK is now £180,314.
However, Nationwide added that, over the longer term, house price growth is starting to slow down, with prices increasing 2% between February and April.
Nationwide chief economist Fionnuala Earley said: “While the monthly rise in prices is stronger than the Bank of England would have liked to see, it can take some comfort from the fact that the underlying trend is softening.”
But the latest rise in house prices is likely to provoke the Monetary Policy Committee (MPC) at the Bank of England – the group that sets the Bank Rate upon which mortgage lenders base their interest rates – into raising rates again next week, probably by 0.25%.
“Too sharp a rate hike could undermine market confidence and dry demand up swiftly,” said Earley. “Previous price increases were supported by resilient demand, but signs are emerging that this is beginning to wane.”