Insurance News Archive

Property market 'cooling'

House prices increased by just 0.3 per cent this month, the smallest monthly gain experienced in some eight months, according to new figures released by Nationwide.

With annual house price growth subsequently decreasing from 10.5 per cent to 9.3 per cent between December 2006 and January 2007, Fionnuala Earley, chief economist at the group, speculated that a surprise quarter point interest hike this month may have contributed to a cooling down in the market.

"Only time will tell how much the surprise decision will affect sentiment in the housing market, but even before January's rate rise there were still some very early signs of cooling," she said.

Speculating that a further interest rate rise in the coming months could not be ruled out, Ms Earley said that rates were also unlikely to move any higher than 5.25 per cent.

"It is an extremely close call between rates remaining unchanged and rising once more, but higher rates will undoubtedly add to the first signs of cooling in the housing market that we have already seen," she added.

31 Jan 2007