The latest House Price Index from Halifax confirmed that house prices increased by 0.4 per cent in August, placing the average cost of a home in the UK at £199,770.
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However, the Halifax House Price Index revealed that August was the third month in the last four that house prices grew by less than 0.5 per cent, confirming that house price inflation is still slowing.
According to experts in the industry, the downward trend in house price growth is expected to continue over the remainder of 2007 as the five interest rate rises since last summer have an increasing impact on household spending and housing demand.
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Lenders have confirmed that the level of new buyer interest in purchasing a house fell for the eighth successive month in July, indicating that buyers have become more cautious.
Chief economist, Martin Ellis, said: The increase in mortgage rates since last summer is having an effect on housing affordability and will bite further during the coming months. Negative real earnings growth in the first six months of this year and rising food prices is also reducing the income households have available for housing.
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Average earnings increased by 3.3 per cent over the year to June 2007; 1.1 percentage points lower than the increase in the Retail Price Index over the same period.
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