LONDON (Reuters) – British house prices rose at a faster monthly pace in August than in July but the market is set to cool as surging energy prices hit households and the Bank of England pushes up interest rates, mortgage lender Nationwide said on Thursday.
House prices last month were 0.8% higher than in July when they rose by 0.2% from June. That was a bigger increase than the median forecast of a 0.1% rise in a Reuters poll of economists.
Prices were 10.0% higher than in August 2021, a slowdown from July’s 11.0% increase but also above the Reuters poll forecast for a rise of 8.9%.
Robert Gardner, Nationwide’s chief economist, said there were signs that the housing market was losing momentum after the surge in demand for bigger homes during the COVID-19 pandemic.
“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters,” Gardner said.
Britain’s most widely followed inflation index rose by 10.1% in the 12 months to July, a 40-year high, and is set to climb further on the back of accelerating power prices.
A separate Reuters poll of economists published on Wednesday pointed to a 7.0% increase in home prices this year before a gain of just 1.0% next year and a further 3.0% rise in 2024.
The BoE has raised interest rates six times since December as it tries to deal with the surge in inflation.
(Writing by William Schomberg, Editing by Paul Sandle)