Culture Lab U.K. (Culture-Lab)

Growth in U.K. property prices is slowing down


The average house price in the UK now stands at £196,893 (almost $400,000).

A recent fall off which follows a strong start to the residential market in 2007 is being attributed to the dampening effects of homebuyers' spending power and strengthening evidence of restraint in housing market.

Halifax chief economist Martin Ellis said, "Higher interest rates, plus the negative trend in real earnings growth and rising food prices are likely to bite increasingly into householders' finances over the coming months thereby curbing housing demand and house price inflation is therefore expected to moderate as a result".

It is believed however that the housing market remains supported by solid economic foundations which together with supply shortages will continue to support prices.

The Bank of England is expected to hold interest rates later today but has indicated that at least one more rate rise will be needed in order to curb upward inflationary pressures before the year is out.

The Royal Institution of Chartered Surveyors has predicted that the four hikes from August last year are still to have their full impact on the residential housing market and all the latest indications suggest that last year's fast paced growth will not be matched in 2007.