UK house prices growth will slow "steadily" this year as confidence in the housing market weakens, according to one of Britain's largest lenders. Woolwich, part of banking group Barlcays, said that the stabilisation of its housing confidence index at 51pc in April was a temporary effect due to the so-called "Baghdad bounce". Its analysts believe that confidence will continue to decline throughout the year and have a moderating influence on house price inflation.
"We believe that the house price inflation will slow steadily as weaker earnings growth, lower bonus payments, and higher household taxes means that people, particularly in the South East, simply cannot afford to chase house prices higher," said Andy Gray, head of mortgages for The Woolwich. House prices in Britain may rise about 10pc year after increasing by 25pc last year, the Royal Institution of Chartered Surveyors forecast this week In its Inflation Report yesterday, the Bank of England said house price growth may slow more quickly than it had expected with price rises actually coming to a halt over the next year. //www.fxcentre.com