UK house prices are “virtually at a standstill” as consumers contend with a squeeze on living standards, Rightmove said.
Asking prices rose by 0.1 per cent in July from the previous month, the property website said on Monday.
The average asking price climbed to £316,421, a “relatively subdued” 2.8 per cent increase from a year earlier. The annual rate of price gains was almost 8 per cent in May last year.
The cooling property market adds to signs that consumer spending, the engine of economic growth for the past year, is losing momentum. While unemployment has dropped to a 42-year-low, meager pay gains are reducing real incomes. The Bank of England is also debating whether to raise interest rates to keep inflation in check.
“Wage growth is muted, there are signs that consumer credit is tightening, and at some point there will be the first rise in mortgage interest rates for a decade or more which will come as a shock,” said Rightmove Director Miles Shipside. “Buyers, many of whom are sellers too, will struggle to afford to pay much more.”
Business picture of the day
Another property report showed that prices fell for a third month in June, with the LSL Acadata House Price Index slipping 0.2 per cent. London values fell 0.5 per cent in May, the most recent month that provides a regional breakdown.
In a separate report on Monday, Deloitte’s Consumer Tracker showed confidence dropped the most in more than two years in the second quarter.
“A squeeze in living standards is definitely starting to dent consumers’ spirits,” Deloitte said.