Halifax's latest house price index puts the average UK house price at just under £200,000 but shows signs the UK property market is slowing down.
House prices across the UK increased by 0.4% in August to £199,770, making last month the third consecutive month in which prices have risen by less than 0.5%.
Halifax says the three-monthly rate of growth has fallen from 4.5% in March to 1.6% in August, an indicator that the market is slowing down.
Annual growth increased slightly to 11.4%, compared with 11.2% in July, but should begin to decrease as strong price growth last year begins to drop out of comparisons, according to Halifax.
Martin Ellis, chief economist at Halifax, comments: “The downward trend in house price growth is expected to continue over the remainder of 2007 as the five interest rate rises since last summer have an increasing impact on household spending and housing demand."
Halifax also predicts recent interest rate hikes will continue to affect housing affordability. The lender points out that while average earnings have increased by 3.3% during the year to June 2007, the Retail Price Index has increased 4.4% over the same period, meaning real earnings have fallen 1.1%.
This change in affordability has already been reflected in buyer interest in purchasing a property, which fell for the eighth consecutive month in July.
However, Ellis says conditions in the UK market mean prices are unlikely to crash.
He says: “Sound economic fundamentals, high levels of employment and a shortage in the number of properties available for sale will, however, continue to support house prices."
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