House prices starting to dip before rate rise

The housing market was starting to cool even before Thursday’s surprise interest rate rise, according to new data. House price inflation has fallen for the first time in 15 months on an annual basis, according to the Financial Times house price index. Experts are warning of the potential impact on the number of purchases of the latest rise particularly by first-time buyers and investors. First-time buyers are already at their most stretched since 2001, according to a RICS survey published this week. The UK’s many buy-to-let investors, meanwhile, have seen a dramatic increase in the gap between borrowing costs and net rental yields. According to the FT index, prices rose by an annual 6.8% last month, lower than November’s 7.4% and the first fall in annual growth since October 2005. References: Financial Times page 1 13/01/07, Daily Telegraph page 13 13/01/07, The Times page 48 13/01/07, The Guardian page 36 13/01/07, The Independent page 49 13/01/07