LONDON — UK house prices are “virtually at a standstill” as consumers contend with a squeeze on living standards, Rightmove Plc said.
Asking prices rose by 0.1% in July from the previous month, the property Web site said on Monday. The average asking price climbed to £316,421 ($412,000), a “relatively subdued” 2.8% increase from a year earlier. The annual rate of price gains was almost 8% in May last year.
The cooling property market adds to signs that consumer spending, the engine of economic growth for the past year, is losing momentum. While unemployment has dropped to a 42-year low, meager pay gains are reducing real incomes. The Bank of England is also debating whether to raise interest rates to keep inflation in check.
“Wage growth is muted, there are signs that consumer credit is tightening, and at some point there will be the first rise in mortgage interest rates for a decade or more which will come as a shock,” said Rightmove Director Miles Shipside. “Buyers, many of whom are sellers too, will struggle to afford to pay much more.”
Another property report showed that prices fell for a third month in June, with the LSL Acadata House Price Index slipping 0.2%. London values fell 0.5% in May, the most recent month that provides a regional breakdown.
In a separate report on Monday, Deloitte LLP’s Consumer Tracker showed confidence dropped the most in more than two years in the second quarter.
“A squeeze in living standards is definitely starting to dent consumers’ spirits,” Deloitte said. — Bloomberg