Rate rises 'dent property outlook'

CONSUMER confidence in the housing market has plummeted in the wake of rising interest rates, Britain's biggest building society said today.

Nationwide said less than half (49%) of homeowners expect the value of their property to increase over the next six months, compared with 64% three months ago.

They are also more cautious about splashing out on major items such as houses or cars. Instead, they are spending freely on household goods such as carpets and kitchen appliances.

Nationwide executive director Stuart Bernau said: 'Although rising interest rates, higher energy prices and subdued real take-home pay growth may combine to slow people's willingness to buy, the economic backdrop remains positive and we don't expect a slump in either house prices or household spending.'

Yesterday, a similar study by rival lender Woolwich showed confidence in the housing market dropped 6% in August, making it the third month in a row that confidence in the housing market has fallen.

The Woolwich index showed 56% of homeowners expecting their property to increase in value compared to 62% in July and 65% in June. It was the largest month-on-month drop since the measure began in 1998.

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