House prices in Britain are falling as interest rate rises at last begin to bite, according to figures published yesterday.
The cost of a home fell 0.1 per cent in July to £152,300 (227,381) Hometrack, the property website, said.
The survey, based on figures from estate agents across the country, reported that the number of new properties listed was up 5 per cent last month while the number of new buyers fell by 4 per cent, both of which will further reduce demand. Time taken to sell properties also increased from four weeks in May to 4.8 weeks in July.
"This is the first price fall recorded by the website this year, suggesting the housing boom may finally be over," said Mr John Wriglesworth, Hometrack's housing economist. "The recent hike in interest rates, scaremongering speeches by the Bank of England governor as well as over-hyped newspaper articles have all combined to bring the housing market train to the buffers."
The bank has raised interest rates five times since November, partly influenced by surging property prices, and some economists have said further rate increases are needed. Yet Hometrack said it saw no prospects for a crash.
"Interest rates are still low by historic standards and there are no signs that households are finding it difficult to service their debt repayments," said Mr Wriglesworth.
The last housing recession, in the wake of the 1980s boom, was caused by the sudden shock of mortgage rates rising from 7 per cent to 13 per cent in a few months, combined with high unemployment figures.
