British house price inflation fell to its slowest rate in more than nine years in July and raised expectations the Bank of England (BoE) would cut rates interest rates next week.
The Nationwide building society said today house prices rose an annual 2.6 per cent, down from 4.1 per cent in June and well below the 20.3 per cent rate seen just one year ago before the property market began to slow.
It was the first time since May 1996 that annual property gains have slipped below wage gains, Nationwide said. Concerns have been rising that the slowing property market could dent already weak consumer spending.
BoE Monetary Policy Committee member Andrew Large said yesterday the fact house prices were no longer rising significantly may be dampening Britons' willingness to spend.
On the month, house prices rose 0.2 per cent, reversing a 0.2 per cent fall in June, leaving the price of an average home in Britain at a seasonally adjusted £158,348 pounds.
At 2.6 per cent, house price inflation has dipped below the 2.9 per cent retail price index, the broadest measure of prices in the economy.
Nationwide said the figures suggested the housing market was softening gently. Other measures of the property market, such as the number of mortgage approvals, even offer glimmers of hope for a revival.
"At this point in time we expect the path of house prices to continue to soften gently for some time. But the risk to this lies in the overall path of the economy," said Nationwide economist Fionnuala Earley.