House prices take first tumble in wake of interest rate increase

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The Independent Online

House prices have suffered their first fall this year after this month's increase in interest rates, according to a snapshot survey of the property market published today.

Vendors slashed the asking prices of their homes in the week that the Bank of England ordered its quarter-point rise, the property website Rightmove said. "This month sees the first clear, quantifiable sign of a slowdown in house prices," said the company, which measures 80,000 house prices every week.

It said the average asking price of properties for sale fell by £683, or 0.4 per cent, in the week to 12 June, the only weekly fall this year. The fall was driven by price cuts in Greater London and the south-eastof England. Prices in the capital fell 1.6 per cent, and the South 0.7 per cent, on the week.

The figures will be seen as the latest sign the property market is cooling. The national estate agents' organisation last week reported a 25 per cent slump in new buyer inquiries over the spring.

Rightmove said the one-week fall failed to offset a strong 3 per cent rise in asking prices in the four weeks prior to the week of the rate decision. Miles Shipside, Rightmove's commercial director, said: "Over the month prices are up again, but close analysis provides evidence that the market may have turned. The impact of four rate rises is beginning to bite. A drop of £693 may not be huge but if it's a sign of what's to come, it could be very significant."

The fall in prices was matched by a sudden jump in the number of sellers, which could indicate a rush by homeowners to sell up before any slump in prices. The number of properties put up for sale rose by 10 per cent, easing the supply shortages that have helped drive up prices over the last five years.

Rightmove, which claims to cover almost half of all homes for sale, said it now had a record 370,000 properties on its site.

Mr Shipside moved to calm fears the UK was headed for a repeat of the 1990s property price crash that left millions with mortgages worth more than their homes. "We are seeing the long-expected slowdown in the market," he said. "It's looking increasingly like a steady and orderly slowdown - the so-called 'soft landing' that some people have said is not possible."

Last week Mervyn King, the Governor of the Bank of England, stunned the housing industry with a warning that the current level of house prices might be unsustainable.