The risk of a slowdown in the UK housing market is growing as interest rate rises by the Bank of England, the threat of recession and soaring inflation put a squeeze on household finances, economists warned.
The BoE increased its main interest rate on Thursday by a quarter point to 1 per cent to curb price rises. It warned that inflation was likely to soar to 10.2 per cent by the fourth quarter and that the economy would go into recession, with real incomes declining and unemployment rising.
The housing market has so far confounded the bleak outlook for the economy, with buyers rushing to seal house purchases while mortgages remain relatively good value. Halifax on Friday said prices in April rose by an annual 10.8 per cent, with price growth accelerating in the past two years.