Print

Property inflation 'less than savings'

New reports predict that house prices will rise by four per cent in 2007 - less than some savings accounts - prompting speculation of a slowdown in property price inflation....

A new property market survey from Hometrack has found that property price growth is shrinking in the UK, posting 0.6 per cent in May down from 0.7 per cent in April. Furthermore the proportion of postcodes with price increases fell during May.

However average price growth is currently £175,000, up by 6.7 per cent on last year. Richard Donnell of Hometrack predicts a fairly rapid slowdown in price growth into the remainder of 2007.

"We expect the headline rate of growth to slow relatively quickly over the rest of the year towards four per cent as affordability pressures put a continued squeeze on purchasing power and more supply comes to the market," he commented.

Economists at Lehman Brothers state that the UK housing market is currently 15 per cent overvalued, according to Firstrung.