A person jogs past a row of residential housing in south London, Britain, August 6, 2021. REUTERS/Henry Nicholls L
UK house prices barely rose in July, indicating the property market is cooling in response to the worsening cost of living crisis.
The 0.1% gain from June was the weakest reading for a year, Nationwide Building Society said Tuesday. Values rose 11% from a year earlier to £271,209 ($332,000).
The housing market boomed during the pandemic and values continue to be underpinned by a shortage of homes for sale and the lowest unemployment since the 1970s, Nationwide said. House prices are now in their longest run of gain for eight years.
However, the hit to living standards from surging inflation is starting to take a toll.
Bank of England figures last week showed mortgage approvals fell further below their pre-pandemic levels in June as lenders raised interest rates to their highest level since 2016.
Homeowners are facing another jump in borrowing costs this week, with the central bank expected to step the fight against inflation by delivering the first half-point rate increase in 27 years.
"We continue to expect the market to slow as pressure on household budgets intensifies in the coming quarters, with inflation set to reach double digits towards the end of the year,” said Nationwide Chief Economist Robert Gardner.
Lloyds Banking Group Plc, the biggest uk mortgage lender, last month downgraded its outlook, predicting house prices will grow just 1.8% this year and fall 1.4% in 2023.
