Housing market is definitely booming. Or cooling
Damian Clarkson     3rd July 2007

Nationwide building society announced that house prices were up 1.1% in June, the fastest monthly increase in 2007 and twice as fast as the same time last year.

According to Nationwide, the monthly rate was more than twice that of May's 0.5% rise and the strongest since December.

“The resilience of the housing market will be another component to add to the rate rise camp’s argument,” says Nationwide chief economist Fionnuala Earley.

Lock into a fixed rate mortgage

Actually, the market is tapering off
But just one day later, property information group Hometrack announced “the slowdown in the housing market continues to gain momentum”, citing a surge in the number of properties being brought to market combined with the higher cost of borrowing.

According to Hometrack, the cost of a typical home rose by just 0.3% in June - half the rate of May's increase and the third successive slowdown. Its data also highlighted how year-on-year house price inflation has fallen from 6.7% in May to 6.4% in June.

“The slowdown is being driven by a mismatch between supply and demand with price rises over June limited to 28% of the country, down from 44% in April,” explains Hometrack research director Richard Donnell.

"The growth in supply comes at a time when demand is faltering on the back of recent increases in interest rates and widespread fears of further rate rises to come.

capped rate mortgages here

So which standpoint is correct?
No wonder homeowners and prospective buyers are confused. The problem with statistics is they can be moulded to say whatever you want them to.

A great example was seen in May, when the Daily Express ran a front-page article declaring “House Prices Still Soaring”. On the same day - and quoting the same statistics - the Daily Mail announced “house prices are falling across wide areas of the country… and this could signal an end of the 11-year property boom”.

Get an offset mortgage here

So are house prices booming or cooling? No one seems to know for sure. But certainly, with a further rate rise now looking almost a dead cert this month, and a further hike to 6% before year end still on the cards, downward pressure on the demand side of the house price equation is only going to increase in the short term. Only time will tell what the result of that will be.

Beat the rate rise, lock into a fixed mortgage

Article produced by EveryInvestor.co.uk