Frothy UK property market to cool on interest rate hikes and regulations

The UK's rapid house price growth will slow down as new regulations come in and gradual interest rate hikes begin, according to a report by credit ratings agency Standard & Poor’s. 

 

The research, released yesterday, suggested that UK house prices would not see a downward correction if the increases in interest rates were relatively small and spread over years, as the Bank of England suggested. 

 

The authors forecast that price growth will slow from seven per cent this year to just three per cent by 2016. Even in the case of an unexpected one per cent rate hike, prices would fall by just one per cent a year afterwards, according to the paper.

 

Data from the Land Registry yesterday reinforced the view, with growth slowing for the first time in over a year. Prices in England and Wales as a whole rose 6.4 per cent in the year to June, with a 16.4 per cent jump in London.