House price growth cooled in August amid early signs of the housing market losing momentum as the cost-of-living crisis worsens, Nationwide has said.
But annual growth remained in double digits, with the average property costing £50,000 more than two years ago.
Annual growth slowed to 10% in August, down from 11% in July, according to the building society’s house price index.
However, prices were up 0.8% month-on-month, marking the 13th month in a row that average prices have risen.
The volume of properties up for sale remains below the level of demand from people wanting to buy, so asking prices are still being driven up, the group said.
The average property cost £273,751 in August, growing more than £2,000 from the previous month.
But Nationwide warned that an increase in energy costs coupled with mortgage interest rates rising is going to put household budgets under pressure in the coming months.
It found that the least energy efficient property could typically see bills surge by £2,700 a year, or £225 a month.
This comes as analysts predict the Bank of England will further hike up interest rates from the current 1.75% base rate.
This is set to push up mortgage repayments for homeowners not tied to a fixed rate or who have come to the end of their mortgage term and are looking to refinance.
Last week, property portal Zoopla said first-time buyers would need to earn an extra £12,250 on average to afford a home as mortgage rates climb this year.
Robert Gardner, Nationwide’s chief economist, said: “There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer inquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels.
“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation set remain in double digits into next year.
“Moreover, the Bank of England is widely expected to continue raising interest rates, which will also exert a cooling impact on the market if this feeds through to mortgage rates, which have already increased noticeably in recent months.”
Jeremy Leaf, north London estate agent and a former Royal Institution of Chartered Surveyors residential chairman, said: “Rises in the cost of living and interest rates are certainly making a difference but the latter has not filtered through to the figures yet, bearing in mind so many borrowers are on fixed-rate terms.”
https://www.northwaleschronicle.co.uk/news/national/20872558.house-price-growth-cools-property-market-loses-momentum-nationwide-says/
