House prices gained a bit of momentum in July after rising at their slowest annual rate in five years in June, mortgage lender Nationwide said on Wednesday.
House prices across the United Kingdom were on average 2.5pc higher than in July last year, faster than growth of 2.0pc in June and above a forecast for a 1.9pc rise in a Reuters poll of economists.
In monthly terms, prices rose by 0.6pc in July from June, faster than a forecast of 0.2pc.
Nationwide said the annual increase remained in the narrow 2-3pc range of the past 12 months and the lender still expected prices to rise by only 1pc in 2018.
Britain’s housing market has slowed since the 2016 referendum decision to take the country out of the European Union. Eight months before Brexit is due to happen, Prime Minister Theresa May has still to agree with the EU about Britain’s future trading relationship with the bloc.
Nationwide economist Robert Gardner said an expected interest rate hike by the Bank of England on Thursday was likely to have only a modest impact on the housing market because most mortgages issued in recent years were on fixed interest rates.
However, around 12pc of homeowners already spend more than 30pc of their gross income on their mortgage and “for those, some of whom will be on variable rates, any rate rise will be a struggle, even though the impact on the wider economy and most households is likely to be modest”, Mr Gardner said.