House prices "bounce back"
UK house prices "bounced back" in June after climbing by 1.1 per cent, Nationwide revealed today.The latest property price survey by the building society showed the annual rate of house price inflation reached 11.1 per cent this month, its highest level since January 2005.Nationwide said that the annual rate of growth was more than twice as fast as that recorded at the same time last year, with property prices soaring by the equivalent of more than £50 per day.The average house in the UK is now worth £184,070 a rise of over £18,000 on the typical price for the same period in 2006.Commenting on the figures, Nationwide chief economist Fionnuala Earley said news of the rise made it likely that Bank of England policy makers would opt for a further interest rate increase."The resilience of the housing market will be another component to add to the rate rise camps argument," Ms Earley said.Global Insight chief economist Howard Archer shared Nationwide's view, stressing that June's "marked spike up" in house prices raised the likelihood of interest rates climbing by 25 basis points to 5.75 per cent next week and would fuel speculation that the base rate of borrowing could hit six per cent by the end of the year.However Nationwide stressed that with the level of house sales already falling, higher interest rates would increase the "squeeze" on demand in the property market over the short term and reduce growth during the second half of the year.The building society said it was standing by its forecast that property prices will climb by between five and eight per cent in 2007.Meanwhile, amid Gordon Brown's announcement that he intends to make housing a priority in his government, Nationwide has urged the new prime minister that any policies he introduces to increase the availability of affordable property must be "carefully thought out and introduced in a measured fashion". Referring to concerns that first-time buyers are being priced out of the market by the growing buy-to-let market, Nationwide said: "An ill-thought out measure which flooded the market with property could do more to destabilise the market for all borrowers rather than just make it a more affordable prospect for new entrants."
Share this..
Related stories
Will the electric car ever takeoff?
As the price of oil continues to move higher and higher with the cost of petrol following a similar path, there is speculation that governments around the world could decide to move into the electric vehicle industry with significant investment and tax incentives. This is not the first time the electric car industry has been suggested as a possible offset against the ever increasing price of oil b...
Read MoreUK government in profit on banking stakes
The UK government today stands with a profit of around £3.4 billion on investment stakes in Royal Bank of Scotland and Lloyds bank. After reporting profits of around £1.6 billion the Lloyds bank share price has increased to 74p giving the UK government a net gain of £3.17 billion on its initial £17 billion investment. As we await Friday's figures from Royal Bank of Scotland the government curr...
Read MoreSavers ready for another fall in UK interest rates!
The general consensus amongst economic experts in UK seems to be that UK rates will fall to 1% next week in a serious blow to those with money in the bank. While many savers in UK are already approaching 0% interest rates on their deposit accounts a potential move to a 1% base rate will bring more and more people into this bracket. As we have commented on a number of occasions, the UK government s...
Read MoreSir Tom McKillop leaves Royal Bank Of Scotland
Chairman Sir Tom McKillop has left the Royal Bank Of Scotland three months early in light of the recent disastrous trading period. While Sir Fred Goodwin took the brunt of the criticism regarding the downfall of the Royal Bank Of Scotland, which is now majority owned by the taxpayer, Sir Tom McKillop has come in for his fair share of criticism over the last few days.
Behind the scen...
Is the building society sector slipping away?
Over the last few months the UK banking sector has grabbed the headlines although unfortunately we've also seen a number of casualties in the building society sector. Not only did we see former building society Northern Rock collapse and taken over by the government, we also saw problems at the Dunfermline building society and problems with the West Bromwich building society.
One of...