Annual house price inflation falls to 4.8%

”Annual

New figures from Nationwide indicate that house price growth for 2007 has fallen to below 5%.

In December, the UK’s largest building society recorded a 0.5% drop in house prices, making it the second month in a row that prices have fallen.

Looking at variance over a longer period, in December, the three-month on three-month rate of growth fell to 0.9%, its lowest level for two years and down from 1.4% in November.

According to the latest Nationwide survey, average house prices rose 4.8% in 2007, bringing house price inflation to its lowest for 19 months.

In June, the annual figure was at its highest for the year, at 11.1% and by November had decreased 6.9%.

The survey puts the average price of a UK house at £182,080, an increase of £8,334 on December 2006.

Fionnuala Earley, chief economist at Nationwide, comments: “Most indicators now show that demand is responding to the pressures of weak affordability, past increases in interest rates and the lower house price expectations that we had expected to take hold earlier in the year.”

Howard Archer, economist at Global Insight, the economic forecasting consultancy, believes that the market “looks set for further deterioration” and expects “the Bank of England to trim interest rates again early in 2008″.

The decline in property inflation will be of particular interest to those with investment and retirement funds tied up in residential property, as currently, better returns are available through cash savings accounts.


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