House price growth at 10% a year despite squeeze on finances

UK house prices rose by 10% in the year to August, the Nationwide has said, despite pressure on buyers' budgets.

The market still has greater demand from buyers than homes for sale, leading to a double-digit annual rise for the 10th consecutive month.

The mortgage lender said the typical property price had risen by £50,000 in the past two years to £273,751.

However, the Nationwide said there were signs the market was cooling, as both energy costs and mortgage rates rise.

The annual growth in house prices did slow slightly last month, down from 11% in July, but the market remains tough for first-time buyers.

"Fast-rising rents are not offering any relief and could keep some buyers in the hunt for a home for longer than they would like," said Myron Jobson, senior personal finance analyst at Interactive Investor,

"Even though the housing market is slowing, it is nowhere near a crash. Strong demand for homes far outstripping available housing inventory means the housing market remains a difficult one for wannabe homeowners and those looking to climb up the property ladder."

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The Nationwide is predicting that an increase in energy costs and rising mortgage interest rates will add to the pressure on household budgets in the coming months.

It suggested that the least energy efficient property could typically see bills surge by £2,700 a year, or £225 a month.

"There are signs that the housing market is losing some momentum," said Robert Gardner, Nationwide's chief economist.

"We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation set remain in double digits into next year.

"Moreover, the Bank of England is widely expected to continue raising interest rates, which will also exert a cooling impact on the market if this feeds through to mortgage rates, which have already increased noticeably in recent months."