‘Firm’ house price growth |
The Nationwide building society has today said that house prices grew by 0.8% in August. This brings the yearly rate of increase to 6.6%.
This update has been the first since the Bank of England raised rates from 4.5% to 4.75% earlier in August. Fionnuala Earley, Nationwide's Group Economist, said “The annual rate of house price inflation picked up for the third consecutive month in August. House prices are now 6.6% higher than at this time last year. This is the fastest annual rate of growth since April 2005 and almost three times faster than at this time last year."
Although a further base rate rise is expected before the end of the year, Nationwide does not expect this to have any significant effect on house prices. Fionnuala added, "Even though we expect rates to increase to 5% - 25 basis points above the peak of the last cycle - current economic conditions, especially in the labour market, are still supportive. This means that rate rises are likely to only be a catalyst to the slowing we had already expected, rather than fostering a repeat of the 2004 slowdown."