Nationwide Reports Subdued Growth

published 29 June 2006

June saw house prices grow by 0.3%, bringing the national average price for a house to £165,730 from £16,632 last month, says the Nationwide?s latest report. As the third consecutive month of flat growth, the mortgage lender has noted this indicates a slowing trend in house price inflation, although the annual rate of growth has increased to 5%, or around £8,000 as an average figure. Fionnuala Earley, Nationwide?s Group economist said that the outlook remains stable while financial markets are still pricing in an increase in rates by the end of 2006, and a further increase in 2007. ?The data shows signs of buoyant demand in May after a weak April, which could be a response to faster house price growth through the spring, and may support further house price rises in the short term. However, focus on the World Cup may mean lower activity in June, softening the trend,? she said. Ed Stansfeld from Capital Economics said that, in his opinion, pressures are easing, and agreed with Ms Earley about the World Cup: ?Uncertainty about what impact, if any, the World Cup may have on the market will make the data a little harder to interpret in coming months.? He continued: ?Once the dust settles we expect data to show that activity levels and price pressures have continued to ease thanks to stretched levels of affordability, subdued levels of consumer confidence and a softer labour market.?

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