House prices continue to rise despite rising costs

House prices are continuing to go up despite the growing cost of living.

The nationwide said prices climbed 11% in the last 12 months, but the rise was just 0.1% over the last month.

Robert Gardner, Nationwide's chief economist, said the housing market has retained a surprising degree of momentum.

He said there were tentative signs of a slowdown in activity. The July figure was slightly ahead of June's annual rise of 10.7% and left the average house at 271,209.

Demand continues to be supported by strong labour market conditions, where the unemployment rate remains near 50 year lows and the number of job vacancies close to record highs, said Mr Gardner.

At the same time, the limited stock of houses on the market has helped keep upward pressure on house prices. He said that the Bank of England is expected to increase interest rates by as much as 0.5% on Thursday and that could have a cooling effect on the market.

We expect the market to slow down as pressure on household budgets intensifies in the coming quarters, with inflation expected to reach double digits towards the end of the year. The Nationwide said first-timer buyer mortgage completions remain at 5% above pre-pandemic levels despite rising affordability pressures caused by the cost of living squeeze.

Mark Harris, chief executive of SPF Private Clients, said that first-time buyer numbers remain strong but that is likely to be reflected by the Bank of Mum and Dad's financial input, as deposit levels rise along with house prices and interest rates.

Borrowers remained very keen to secure a fixed-rate mortgage before rates go up again, as they are expected to do later this week, he said. Minds are focused on getting deals done before the cost of borrowing goes up further. Nicholas Finn, managing director of Garrington Property Finders said today the market is being fuelled by people's desperation to find a home before interest rates rise further and the cost of living crisis gets deeper.