UK Aug house prices up monthly 0.6 pct, market turmoil poses risks - Nationwide |
|
|
|
Published
:
Thu, 30 Aug 2007 07:15
|
LONDON (Thomson Financial) - UK house price inflation bounced back in August despite the turmoil in the financial markets, the country's leading building society said today.In its monthly survey of the housing market, the Nationwide said house prices rose by a monthly 0.6 pct in August. That's up on the 15-month low rate of 0.1 pct recorded in July and the 0.4 pct predicted by analysts.However, base effects mean that the annual rate has moderated again to 9.6 pct, the lowest since March, from July's 9.9 pct.It added that a typical UK property cost an average of 183,898 stg in August, 16,177 stg more than one year ago.Though the Nationwide said the uncertainty in financial markets is unlikely to have much of an effect in the short term it did warn of risks in the longer term given the dependency of the UK economy on financial services.'The US sub-prime crisis has created turmoil in international financial markets, but this is unlikely to have a significant additional effect on the rate of growth of house prices in the UK in the short term,' said Fionnuala Earley, the Nationwide's chief economist, who still expects house price growth in 2007 to come in close to the middle of the 5-8 pct forecast range.She said the expected slowing results from weaker affordability, as house prices continue to grow more quickly than earnings, higher interest rates and inflation on consumers' pockets and lower house price expectations.The fall-out from the US sub-prime crisis, which has prompted sharp falls in stock markets and higher short-term money rates, will largely depend on how long it takes for the market jitters to settle, she said.'A prolonged financial market downturn would be uncomfortable for the overall economy given the importance of this sector to economic growth over several years,' she said.'Such a downturn would not only affect investment bankers, but would also have negative knock-on effects for legal, accountancy and other professional services that have benefited from the structured credit boom,' she added.On top of this, Earley said jobs in restaurants, cafes and other services catering for city workers would also be affected.'The impact on London property prices can only be negative compared to the current situation, particularly at the top end, but employment generated from Olympic and other infrastructure investment along with supply issues will remain positive factors for the mainstream market,' she added.pan.pylas@thomson.compp/sljCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
|
|
|
|
Print this Story
UK house price inflation slows to 15-month low in July - Nationwide 