Interest rate rises hit house prices as annual inflation drops below 10%

The string of recent interest rates has started to hit house prices across the UK.

In July house prices grew by only 0.1% according to a Nationwide survey, bringing annual house price inflation below 10%.

The bank said underlying growth was on a downward trend despite a 1.1% rise in house prices in June.

Nationwide chief economist Fionnuala Earley said: “After surprisingly picking up steam in June, house prices were almost unchanged in July, and their underlying trend growth resumed a downward path."

Potential buyers were concerned about overstretching themselves in a higher interest rate environment said Earley.

She added that real disposable income had fallen over two quarters due to higher retail inflation, low earnings growth and higher interest rate payments.

The annual house price inflation slowed to 9.9% from 11.1% in June, and the three-month rate of growth fell to 2%.

Average UK house prices in July were £184,270, a rise of £16,537 over the previous year.