House prices 'showing early signs of cooling'

30-Jan-2007

Potentially offering relief to first time buyers, the UK's housing market is showing early signs of cooling, research suggests.

According to data released by Nationwide Building Society, house prices in January grew by 0.3 per cent, a decrease of 0.9 per cent from the previous month, potentially mitigating effects of rising house prices on first time buyers.

Expressed at an annualised rate, house price growth fell to 9.3 per cent, from 10.5 per cent in December 2006.

"2007 started off with a bang as the Bank of England raised interest rates for the third time in six months," said Fionnuala Earley, chief economist for Nationwide.

"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 already some very early signs of cooling," she added.

In related news, the National Institute for Economic and Social Research has announced its belief that interest rates should be increased to 5.5 per cent in order to mitigate the impact of wage-related inflation.

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