House prices cooling, say new reports

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The Independent Online

Britain's red-hot housing market showed further signs of cooling last month, according to two separate reports that showed prices fell.

Britain's red-hot housing market showed further signs of cooling last month, according to two separate reports that showed prices fell.

The average property price fell 0.11 per cent in July, a back-to-back monthly decline that helped the annual rate of house price inflation ease to 10.3 per cent - its lowest level since January - the National Association of Estate Agents (NAEA) said yesterday.

A survey of the trade body's 10,000 members revealed that the slowdown is expected to continue for the rest of the year, with estate agents predicting asking prices will slip by an average of 1.55 per cent.

Their view is borne out by a report published today that shows average asking prices across England and Wales fell 2 per cent last year. Five interest rate rises since November have taken their toll, with asking prices in the five weeks to 14 August falling to £192,335 from £196,198, Rightmove, the property website, said. The slowdown meant its measure of annual house price inflation fell in July for the first time in seven months, to 15.7 per cent.

Miles Shipman, Rightmove's commercial director, said: "Buyers are having to accept that the market has turned and that realism is the order of the day in setting their prices. Here [the slowdown] is clear as daylight for everyone to see."

The NAEA said all indicators of activity fell during July, led by large falls in the number of enquiries from new buyers, as well as a steady decrease in the number of homes on the market and new instructions. Their members said the volume of business in July fell 5 per cent on average when compared with the same month last year, while properties took almost twice as long to sell in July as during June at 12 weeks.

Richard Hair, the association's president, said: "The feedback we are receiving from estate agents at the front line indicates a definite slowing down in the housing market. Both buyers and sellers are starting to exert caution following further rate rises and warnings about the future of the market."

The Bank of England's Governor, Mervyn King, has issued several warnings to homeowners over the past few months about the need to consider the possible future path of interest rates.

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