Figures just published by the Nationwide Building Society show that UK house price rises for June increased by only 0.9 percent, down from a May figure of 1.7 percent. 'Although the Nationwide survey indicates a UK-wide average house price of £151,524, the perceived slowdown in the rate of price rises will bring relief for first time buyers, who have seen the time needed to save a deposit increase to nearly four years in some areas,' says Frankish.
The slight rise in the Bank of England base rate - currently at 4.5 percent compared with a low of 3.75% in late 2003 - is beginning to have an impact on homeowner's expectations, argues Frankish. 'Six months ago, there was feverish activity as people clamoured to enter the housing market. The latest rate rises have taken some of the pressure off potential buyers, as they are starting to realise that price rises may not continue at the same
pace indefinitely,' he says.
'We are finding that lending figures are remaining very strong, both in the volume of cases we are handling, and in the amounts being borrowed. However, there is no doubt that some of the heat has been taken out of the market, as a result of the Bank of England Governor's recent comments, as well as the media's interpretations of the market forces. In fact, these two factors
have probably had more of a cumulative effect than the rate rises
themselves,' adds Frankish.
'The most important factor remains the quality of lending activity in the marketplace - in other words whether mortgage applications are likely to be accepted or not. At the moment, while the overall number of applications might be down slightly compared to a few months ago, the quality of activity is better than ever,' he states.
'I maintain that there will be further slight interest rate rises during the remainder of the year. These will help bring house price inflation down to a sensible level of maybe 7% or 8% year on year, which would help to keep average prices in check,' concludes Frankish.
