UK HOUSING MARKET TO AVOID SLUMP DESPITE ZERO GROWTH IN PRICES

Britain’s housing market is expected to avoid a slump triggered by rising interest rates, despite a drop in house price inflation to zero in May.

The Office for National Statistics said a decline in month-on-month growth from 0.5% in April to 0% in May meant the annual rate of house price inflation dropped to 1.9%.

However, a bigger-than-expected fall in UK inflation has meant financial markets are no longer expecting interest rates to increase as sharply, helping the housing market.

Meanwhile, rents jumped for the 14th consecutive month, by a record 5.1%, adding to concerns that the private rental market is struggling to meet a rising level of demand from people unable to buy a home.

A rise in mortgage rates and the cost of living crisis have prevented many people from entering the property market over the last year, leading to a cut in the number of transactions and the end of a two-year, 20% price spurt.

Recent figures from Nationwide and Halifax have shown annual prices falling, but the ONS’s broader measure of the market, which includes cash buyers, found that annual property inflation had narrowly avoided going backwards.