House Prices
According to a new report from the property information firm, Hometrack, house prices came to a halt in July with house prices rising by just 0.1%, pulling down the annual growth to 5.9%. Last month the annual growth was set at 6.4%. The drop in house prices is believed to have drop due to the higher interest rates and overstretched affordability. Houses in the London market have slowly been coming to an end with prices rising just 0.2% in July.
This is bad news for householders holding interest-only home loans. Many bought on the hope of selling on at a higher price, giving them a bigger down payment for their next home. These householders could find themselves owing more on their home loan than the house’s value.
Hometrack reported that prices rose in three areas, which are London, South East and Wales. Prices fell in East Midlands and Yorkshire with other areas remaining unchanged. In May experts predicted that the interest rate rises would affect the housing market, which it is now starting to show just how the interest rates have made an impact on the levels of housing demands. The slowdown of the housing market has increased due to the supply of housing for sale over the recent months with the increase in supply being moderate throughout the country. With the predictions of interest rate increases many experts believe the housing market to continue to slow for the remaining half of this year as the supply of houses on the market in addition to the interest rates will keep the housing market at a slow decline or halt. The increase in supply of homes is believed to be due to the fact that many homeowners have placed their homes on the market to avoid paying for the Home Information Packs that were due to come out on June 1 but were postponed to August.