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Property prices hold up despite credit crunch

The housing market has resisted the effects of the credit crunch in September, with prices rising by a steady 0.7 per cent, according to Nationwide Building Society.

Chief economist Fionnuala Earley says overall house prices defied the gloomy predictions of some recent headlines but the underlying growth is still on a decelerating trend.

The 12-month rate of house price inflation came down from 9.6 per cent in August to 9 per cent. The quarter on quarter rate of price growth slowed from 2 per cent to 1.6 per cent, the lowest level since July 2006.

Earley says that although the credit crunch has not had an immediate impact on house prices, the longer-term effect will undoubtedly take some of the froth out of the market.

She says: “The message from lenders is clearly that from now on, risk must have its price. Highly leveraged borrowing will remain less attractive and lending volumes in this segment may decline.”

Wave director of distribution and sales Mehrdad Yousefi says: “The recent reports show there is greater resilience in the housing market than we might have thought. Undoubtedly a combination of tightening lending criteria and affordability problems for first-time buyers will have an impact but hopefully not as profound as some people thought.”

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