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City analysts today warned the government that the British economy is set to witness a recession which could last up to 18 months. Capital Economics predicts that the gross domestic product for the...
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Monday 16th July 2007
The government has released figures reinforcing evidence that growth in Britain's residential property market is slowing down.
Statistics from the Department for Communities and Local Government (DCLG) show that annual house price growth fell to 10.9 per cent in May from 11.3 per cent one month earlier.
The three months to May saw prices rise by 11 per cent, taking the average house price in the UK up to £211,056.
Howard Archer of research firm Global Insight said the data suggested the market was coming "off the boil", blaming recent interest rate hikes for difficulties experienced by first-time buyers and struggling to meet their mortgage payments.
"It does appear overall that the housing market is now losing momentum as demand is increasingly pressurised by the rising affordability pressures stemming from higher interest rates, modest real disposable income growth and elevated house prices," he said.
"Nevertheless, house price growth seems likely to slow relatively gradually during the coming months. Although demand is slowing and market tightness is easing, housing supply levels are still below long-term averages, so vendors in many areas still have some pricing power," he added.
The London market appeared to buck the national trend, with annual growth in the capital rising to 14.5 per cent from 14 per cent in April.
This reflected a regional imbalance in which only the east, south-east, south-west of England and London had average prices above the UK average.
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