Dwindling first time buyer interest leads to slower growth

28-Aug-2007

House price growth slumped to its lowest level for 20 months in August, figures from Hometrack show, suggesting that first time buyers are now increasingly unable to purchase a first property.

Hometrack has reported that annual price growth fell from 5.9 per cent in July to 5.4 per cent in August, and while a fall in prices could benefit buyers in the long-term, for now it suggests they are struggling in the face of greater affordability problems.

The only area of the country to see prices rise on the month was London, and even then the capital enjoyed growth of just 0.1 per cent, the study added.

"The housing market faces a testing time over the rest of the year," commented Hometrack director of reserach Richard Donnell, who added that higher debt levels could nonetheless mean that first time buyers remain discouraged from purchasing property.

"The increases in interest rates over the last 12 months have pushed average debt servicing costs to a 15-year high and this will continue to take its toll on levels of market activity and house price inflation over the next 12-18 months," he added.

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