Sub-prime struggles 'won't hit house prices short term'

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Market turmoil is unlikely to hit house prices hard in the short term but there are longer term risks, according to Nationwide.

The bank says the house price growth rate rose 0.6% during August but the annual rate fell from 9.9% to 9.6% in July. The average house price reached £183,898 in August, a £16,177 rise on one year ago. Fionnuala Earley, chief executive at Nationwide, says the bank expects house prices in 2007 to grow between 5% and 8%. She attributes the slow down to weaker affordability, rising interest rates and lower house price expectations. She says: “While it has taken some time for these factors to bite, there are now clearer signs of slower demand in the market reflected in the collapse in new...

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