(1888PressRelease)
May 07, 2007 - The latest report on the UK economy by the Royal Institution of Chartered Surveyors (Rics) suggests that underlying growth has been slowing since the beginning of the year in response to the interest rate hikes effectuated by the MPC in each of August, November and January.
As a result, Rics economists believe a further interest rate rise will impact significantly on house price inflation as demand for property will fall as the cost of borrowing rises.
"The cumulative impact of the three interest rate increases since last autumn is weighing on buyer affordability," the RICS report states in the 'residential property' section.
"According to the Nationwide, underlying house price growth eased further in April to two per cent, which is slowest pace since last August.
"Indeed this trend is likely to be sustained following a widely expected rate hike to 5.5 per cent by the Bank of England this Thursday."
Julian King, director of the UK's leading fast sale property company, National Homebuyers, says: "People should not just worry - but be petrified about house price growth.
"All the indications from our own data and from our industry are that people are looking to sell quickly because of a lack of confidence in the market.
"The increasing frequency of interest rate rises is currently attacking the growth of house prices.
"As prices set to rise to over seven per cent by the end of the year, along with Rics, we predict a strong reduction in property values by the end of 2007".
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