(Bloomberg) -- U.K. house-price growth remained stuck in a relatively slow gear at the start of the fourth quarter, Nationwide Building Society said.
Values increased 0.2 percent from September and were up 2.5 percent compared with a year earlier. The annual change -- within the range recorded for much of this year -- is about half the pace seen in 2016.
With the market already cooling, property demand could take a further hit if the Bank of England presses ahead with a well-flagged interest-rate increase this week. While the hike will only be 25 basis points, it'll be the first in more than a decade and buyers could be deterred if they think there is more to come. Nationwide said the impact will probably be “modest” for most homeowners.
Higher borrowing costs would add to stretched valuations and uncertainty surrounding Brexit as factors taking a toll on housing. One survey last month said prices in London are falling at the fastest pace since the financial crisis.
Mortgage holders are already getting their finances in order before the expected hike, with demand for five-year fixed mortgage deals at a record, according to property services firm LMS.
“While a potential quarter-point interest rate rise this week will be manageable, it's the impact on sentiment that is the unknown,” said Jonathan Samuels, chief executive of property lender Octane Capital. “Hard numbers aside, rates rising for the first time in a decade will be a symbolic moment.”
To contact the reporter on this story: Fergal O'Brien in London at fobrien@bloomberg.net.
To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net, Brian Swint, Jana Randow
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