Interest rates slow house market

House price rises showed signs of a continued slow down in March, according to new figures.

Figures released by the Nationwide Building Society reveal that house prices increased by 0.4 per cent in March compared to the 0.6 figure for February which was already down from the 1.1 per cent rises seen in the last three months of 2006.

Over the past year the average house price has gone up £15,000 to £177,083, which amounts to a rise of £41 a day.

Fionnuala Earley, Nationwide’s chief economist, said: "While the annual rate of house price inflation has yo-yoed over the last few months, the underlying trend is clearly softening as interest rate rises take effect."

She added that other indicators such as mortgage approvals and enquiries at estate agents also pointed towards a calming of the market.

The British Bankers Association has revealed approvals for home loans are five per cent lower than a year ago.

Despite the drops in those areas, Nationwide still forecast five to eight per cent house price growth for 2007.

Ms Earley said that while demand may be cooling, the surfeit of buyers and tightness in the supply will conspire to continue supporting price increases.