Housing market 'suffers worst slowdown for a year'

The five rises in interest rates over the past year have "skimmed the froth" off the property market, an estate agents website said today.

The five rises in interest rates over the past year have "skimmed the froth" off the property market, an estate agents website said today.

Rightmove said the housing market suffered its sharpest slowdown for a year and urged the Bank of England not to raise rates when its Monetary Policy Committee meets next, on 4 November.

Its warning came as a separate report said that the chance of a house price crash was "remote" while the general economy was still in robust health.

Rightmove, which scans 100,000 asking prices for homes for sale with nine estate agents, said annual house price inflation slowed to 13.4 per cent over the last four weeks from 16.4 per cent in the previous period.

It said that supply had surged, with the number of properties per agent reaching a two-year high, while demand weakened.

It forecast that house-price inflation will fall into single digits during next year. "We continue to see a moderation in house price inflation, as wiser sellers adopt a more realistic view of the value of their homes," Miles Shipside, its commercial director, said.

"Successive rate rises have had the desired effect of skimming the froth off the housing market.

"Another rate rise on 4 November is widely tipped, but raising the cost of borrowing a sixth time would definitely be like a downpour on the homebuyer's bonfire night party."

The annual rate of house price inflation dropped most markedly in the North, from 31.3 to 21.6 per cent, East Anglia (14.4 to 5.2 per cent), the South-west (17.1 to 10.6 per cent) and Greater London (10 to 6.9 per cent).

In the two regions where the annual rate rose, the rise was only marginal (less than one percentage point) - from 24.6 per cent to 25.4 per cent in the North-west and from 19.8 to 20.2 per cent in Wales.

Meanwhile, the Ernst & Young Item Club, a forecast unit that uses the Treasury's economic model, said the possibility of a major housing price crash was "remote".

It dismissed recent predictions of a fall of between 20 and 40 per cent as scare stories. "The Item Club believes forecasts of crash and burn in the housing market will yet again turn out to be wide of the mark," Professor Peter Spencer, its economic adviser, said.

"After all, inflation and interest rates remain at a historically low figure and as our summer forecast confirmed, we are close to full employment in the UK."