The latest monthly house price survey from Nationwide shows that prices rose less strongly in July t...
The latest monthly house price survey from Nationwide shows that prices rose less strongly in July than in June, but that the market still remains at its most buoyant since the late 1980s.
The average price of a house in the UK hit £108,818 as prices surged another 2.5% on the previous month.
This takes the annualised house price inflation to 21%, and goes counter to the recently reported slowdown in consumer spending on the high street.
Although the rate of inflation was lower than June's 3.3% figure, it is still above the six-month average and is now at the highest level since 1989, Nationwide says.
As long as the economy continues to move along at its current rate and as long as expectations of low interest rates continue, demand is going to remain high, keeping house prices up, the lender says.
It does warn, however, that borrowers are increasingly stretching themselves, particularly in the southeast and that "we would urge both lenders and borrowers to maintain a prudent and cautious approach to home buying."
Affordability in London in particular is an issue, with rising unemployment in the capital, although Nationwide expects any deflationary pressure on house prices outside London due to falling share prices to be "muted".
The major threat to demand for housing now seems to come from the state of the US economy, which, if its moves back into recession again, could threatened recovery in the UK manufacturing sector and depress UK consumer confidence.
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