Nationwide fears a slowdown ahead in housing market |
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Published
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Mon, 27 Mar 2006 08:50
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LONDON: U.K. housing market is reaching a turning point as the boost it received from the interest rate cut in August last year is diluting and high prices become unsustainable, says building society Nationwide.
It warned that the mini-boom that prevailed in the sector for nearly five successive months is about to fade.
Nationwide's chief economist Fionnula Earley said the industry is at the stage "where affordability constraints are biting -- and there are other things on the horizon that will stop people splashing out: higher utility bills, rising unemployment".
She said the move to raise the stamp duty threshold by 5,000 pounds to 125,000 pounds contained in this year's budget proposals is no consolation.
The firm has forecast house price growth of zero to 3 per cent for 2006. While the growth has been 3.7 per cent in February, this average is an indication of a clear slowdown in the latter part of the year.
Other mortgage lenders too feel the pick-up is likely to slow down as the year progresses. Halifax's chief economist Martin Ellis says people do not have the spare cash to put money into the housing market.
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