An article in the June 28, 2007 edition of Daily Mail, showed how property prices have increased 1% in the month of June.
Nationwide stated that property values were raised by 1.1% during that same time. This was more than double the rate of increase seen the month before.
The typical home in the UK is now valued at approximately 184,000 pounds, more than 18,000 pounds higher than last year during the same time. From this it can be concluded that houses are rising in value at approximately 50 pounds per day.
The resilience of the housing market will put further pressure on the Bank of England’s Monetary Policy Committee to raise the base rate next week. On Tuesday, Sir John Grieve, deputy governor of the Bank of England, gave a clear indication that rates would rise because of the increase in borrowing to fund huge massive private equity buy-outs in the City.
Fionnuala Earley, chief economist at Nationwide, explained that while they expected rates to raise to 5.5% in August this news, combined with the fact that rates remained on hold only slightly in June, will set the stage for that rate increase to move forward into July. The risk of a rise to 6% in July will increase significantly.
The economist still believes that the trend in house price growth is softening. Negative real earnings growth and high borrowing costs are expected to discourage home buyer demand in the short term and will reduce the rate of house price growth at the end of 2007.
Nationwide predicts a total of 5% – 8% total house price growth in 2007 in total.