House price inflation cool at 0.3%

The Nationwide has reported that property inflation for January was a cool 0.3%.

This represents the lowest growth in property prices for 8 months, and cuts the previous 12 month inflation to 9.3%, down from December’s figure of 10.5%.

On a three-monthly indicator, prices were running at a growth of 3.3%.

The Nationwide attributed recent interest rate rises as a key factor in the cooling, and figures from the Bank of England indicate that there was a significant drop in house sales through December.

Despite the latest figures, general expectations are that short supply of housing will keep the UK property market relatively bouyant through 2007, with a general slowdown rpedicted for 2008 onwards.

However, the housing market so far has proved difficult to predict, with most analysts predicting a slowdown in 2006 when in fact the market accelerated.

It remains to be seen what impact the surprise rise in interest rates to 5.25% in January may have on the general property market through the year, especially as further rate rises remain a possibility.

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