House price growth set to stutter as rate hikes shut out prospective buyers

JACK

Barnett

HOUSE price growth is poised to stutter, new figures out this week are expected to show, as prospective homeowners are gradually priced out of the market by the Bank of England’s successive interest rate rises.

Numbers from Britain’s largest mortgage lender Halifax on Wednesday are set to show house prices grew around 0.6 per cent over the year to May, down from a growth rate of 1.6 per cent in the previous month.

For the month of May, house price rises are tipped by consultancy Oxford Economics to have stalled completely, signalling the Bank’s efforts to cool the UK economy to grip price pressures are taking effect.

“The latest numbers for house prices, mortgage lending and housing transactions suggest that the toll higher rates are taking in that sector is rising,” the group said in a note.

Inflation is proving much tougher to eradicate than experts expected. Numbers from the Office for National Statistics last month revealed the rate of price increases slimmed to 8.7 per cent from 10.1 per cent, a much smaller drop than was forecast.

Core inflation, however, jumped

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Bank governor Andrew Bailey and co have jacked up borrowing costs 12 times in a row to 4.5 per cent, and financial markets expect the Bank to send them to 5.5 per cent. Those hikes have raised mortgage rates, forcing more potential buyers to park their homeownership dreams for the time being. Research from the Royal Institute of Chartered Surveyors on Thursday is anticipated to show higher mortgage costs are squeezing demand in the housing market.

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