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Housing market cools as buyers&#39 confidence ebbs

The housing market is cooling off as consumers lose confidence, according

to Nationwide&#39s latest house price index.

But Nationwide says although the underlying demand for houses may have

slackened in May and the increasein prices was weaker than expected for the

time of year, there is no reason to believe the market is heading for a

significant downturn.

Figures show the average house price rose by just £113 in May,

bringing the average price to £81,006 compared with £1,500 in

April. House prices are 16 per cent higher than a year ago although, when

seasonally adjusted, prices fell last month by 0.4 per cent compared with

an increase of 1.6 per cent in April.

Nationwide also says recent economic growth is moderately slower, meaning

the number of houses sold is lower as consumer confidence is undermined.

Nationwide divisional director (planning) David Parry says: “It is likely

the modest slowing in national house prices this month has been influenced

by the South-east. While there is scant evidence of a weakening of this

region&#39s economy, confidence may have been affected by stockmarket jitters,

the withdrawal of Miras and fears of higher interest rates.”

Nationwide is revamping its income protection plan to allow individuals to

get up to 60 per cent of their gross earnings as a tax-free income in

addition to state benefits if they are unable to work.

Nationwide Life managing director Bill Tonks says: “Long-term incapacity

benefit paid by the Government in the event of illness will not enable many

people to maintain their normal lifestyle. It is therefore important to

make provision to ensure your income is not heavily reduced in the event of

accident or illness.”


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