First time buyers struggle in May

07-Jun-2007

The latest house price index to be released for May has echoed previous reports that first time buyers found it increasingly difficult to purchase property last month.

The Halifax House Price Index has shown that the average price rose by just 0.3 per cent last month as buyers struggled to cope with higher interest rates.

While a drop in annual house price inflation – down to 10.6 per cent from 10.9 per cent in April, according to the study – is promising in terms of future affordability, recent hikes in the base rate more than compensate for such benefits, the index indicates.

The study cited evidence from the Royal Institution of Chartered Surveyors (Rics) and the Council of Mortgage Lenders (CML) as reasons for the slowdown, pointing to a fifth consecutive month of lower buyer interest and a fall in mortgage approvals.

"The recent slowing in monthly house price inflation, together with further evidence of moderation in housing market activity, suggests that the interest-rate rises since last summer are having an impact on the market," advised Martin Ellis, chief economist at Halifax.

Interest rates are expected to remain at 5.5 per cent when the Bank of England announces its decision this afternoon.

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