The latest Halifax House Price Index revealed a 0.7 per cent rise in Julys house prices, up from 0.4 per cent the month before and 0.2 per cent in May. The latest rise took the annual rate of increase up to 11.2 per cent from 10.7 per cent in June.
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However, Halifax chief economist Martin Ellis said that as this was the fourth month in which prices had grown at less than 1 per cent was proof of slowdown in response to five interest rate rises over the past year.
He said: We expect the downward trend in house price growth to continue as the five interest rate rises since last summer have an increasing impact on household spending and housing demand.
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Sound economic fundamentals, high levels of employment and a shortage in the number of properties available for sale, particularly in London and the South East, will, however, continue to support house prices.
The increase in the proportion of borrowers taking out a fixed rate mortgage in recent years appears to have affected the timing of the housing markets response to interest rate changes.
As a result, house price inflation and activity are likely to take longer to slow as interest rates rise because many borrowers are only affected when their fixed rate deal matures.
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Over the last 18 months, nearly 70 per cent of new mortgages have been taken out on fixed rate terms; substantially above the average of around 40 per cent since 1993.
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