Recent interest rate rises seem to be having a cooling effect on the housing market, with house price growth nearly stopping in July, figures show.

Nationwide's house price index shows that house prices have risen by just 0.1 per cent in July, with the average UK property increasing in value by just £200 to £184,270.

Chief economist Fionnuala Earley said that after picking up steam in June, house price growth had resumed a downward path.

"The sharp slowdown in July's house price numbers could show that potential homebuyers are thinking twice about overstretching themselves in a higher interest rate environment," she said.

Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors, said that interest rates were "finally manifesting their way into the minds of homebuyers" and said that the institution expects a "sluggish" period leading up to Christmas.

Meanwhile, figures from SmartNewHomes.com show that prices for brand new homes fell by 0.3 per cent in June and managing director David Bexon said that the trend would probably continue over the coming months.

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Author:  Joanne McCabe

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