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House price growth set to halve

House price growth is expected to halve this year amid growing affordability constraints, according to Rightmove. Figures from the property website show that the average national asking price rose by an annual 9.7% last month—a slowdown from 10.2% in April. However, increased borrowing costs and more choice in properties on the market are forecast by Rightmove to cause that rate to slow to 5% by the end of the year. Demand per property also dropped 8% in May compared with April. Historically, an increase or decline in demand per property has preceded a movement in house prices in the corresponding direction. “Overall, our analysis shows that properties are achieving 98.9% of the final advertised asking price on average, which is also the highest percentage since our records began,” Tim Bannister, Rightmove’s director of property data, said. “Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing," he added. Meanwhile, the EY Item Club appears more bullish on the outlook for house prices this year, predicting growth of 8% in the average cost of a home to £283,000, down from 9.5% last year. It forecasts a fall in growth to 1.4% and 1.2% over next year and 2024, respectively.

The Times City A.M. The Daily Telegraph The Guardian

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