House prices in Britain rose at their slowest pace since November in June, a key survey showed today, providing further evidence that higher interest rates may finally be cooling the market.
Prices rose 1.2 per cent in June, compared with 2.2 per cent the previous month, although the rise in the latest three months compared with a year ago jumped to 21.5 from 20.4 per cent, according to the Halifax House Price Index.
Economists said the survey will be welcomed by the Bank of England (BoE), which has raised interest rates one percentage point since November partly to cool the housing market, and take some pressure off the BoE to accelerate the pace of monetary tightening.
Forty-five out of 46 economists polled by Reuters this week said they expect the BoE's rate-setting Monetary Policy Committee (MPC) to keep interest rates at 4.5 percent this month and most saw an August increase of 25 basis points as more likely.
Bank of England Governor Mervyn King has repeatedly said in recent weeks that the ratio of house prices to incomes is not sustainable and that house prices may fall - comments which caused volatility in the shares of listed housebuilders.
Other MPC members have also expressed their concerns in the past month about house prices. Hence, although the bank may be relieved to see signs of easing, it is unlikely to take a handful of weaker house price surveys as proof the market has been tamed.