View more on these topics

Slowdown as new buyers fall away

Nationwide says affordability constraints, higher interest rates and lower house price expectations are more likely to affect UK property prices in the short term than the current market volatility.

The company says the rate of house price growth increased during August by 0.6 per cent but the annual rate fell to 9.6 per cent from 9.9 per cent in July.

But Nationwide still expects house price growth for 2007 to be around the middle of its forecast range of 5-8 per cent. It says slowing growth is primarily being driven by weaker affordability, the effect of higher interest rates and inflation on consumers’ pockets and lower house price expectations.

Chief economist Fionnuala Earley says: “It has taken some time for these factors to bite but there are now clearer signs of slower demand in the market reflected in the collapse in new buyer enquiries. In addition, the stock-to-sales ratio, which leads house price inflation by five to seven months, predicts a continued slowing in the annual rate of house price inflation.”

Earley considers that the overall extent of any damage to economic growth and the housing market will depend on the duration of the credit crunch. She says: “A prolonged financial market downturn would be uncomfortable for the overall economy given the importance of this sector to economic growth over several years.”

Earley says that the turmoil in credit markets will strengthen the case of the doves on the Bank of England monetary policy committee as it will be reluctant to do anything to add uncertainty while the markets remain volatile.

“The Bank of England’s reluctance to intervene in the markets in the same way as the Fed and the ECB suggests that at the moment it is fairly sanguine about the lasting effects of the credit crunch,” she adds.


HSBC launches “one-stop shop” protection product

HSBC has launched a new protection plan designed to cover against death, sickness, trauma and unemployment.The product, called LifeChoices, has four elements which can be mixed and matched to provide the desired level of cover. It also has a stripped down underwriting process involving just three questions which HSBC claims will see three quarters of […]

Investors focusing on corporate profits, says BlackRock

Investors are beginning to focus on corporate profits to gauge how well companies are holding up amidst the slowing economy and ongoing credit problems, according to BlackRock. Vice-chairman and chief investment officer for global equities Bob Doll says estimates for third-quarter earnings growth are around 5 per cent, which Doll says may be too high. […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm