Property prices weaken in May

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by Kay Murchie

A survey has shown indications that Britain’s housing market is starting to weaken following signs in lending figures and mortgage approvals.

A house price survey by the Halifax showed prices increased to 0.3% in May, down from 0.9% in April and below predictions for a 0.5% gain. The Halifax commented that buyer interest in properties fell for the fifth consecutive month in April, indicating that price growth could ease further.

An economist at Global Insight suggested that affordability pressures will increase if interest rates rise by a further 25 points to 5.75%. Also, it is possible that interest rates may reach 6% before the end of 2007 which could prevent many from taking their first steps onto the property ladder.

However, the annual 3-month rate of price growth held in double digits at 10.6 percent, lessening from 10.9 percent in April but pointing to residual strength in the market.