Nationwide: Housing market slows down

The monthly change puts the average house price at £173,225 for January.

Annual house price growth shows even greater signs of the housing market cooling, dropping from 10.5 per cent in December to 9.3 per cent in January.

"2007 started off with a bang as the Bank of England raised interest rates for the third time in six months," commented Fionnuala Earley, Nationwide's chief economist.

"Only time will tell how much the surprise decision will affect sentiment in the housing market, but even before January's rate rise there were already some very early signs of cooling."

Other signs of a slowdown include estate agents reporting some easing of demand in December and January, the number of newly agreed sales also rising more slowly and the length of time properties are on the market increasing.

The number of new buyer enquiries also recorded a fall in January, the first in 19 months.

Ms Earley concluded: "Of course, prices are determined by supply as well as demand. For now, supply, as measured by new instructions for sale of properties with estate agents, is actually falling more quickly than demand and this puts upward pressure on house prices.

"As a result, estate agents are still reporting firm house price gains and an expectation of more to come. However, eventually the slower demand will ease the rate of house price growth to more sustainable levels."

Resource: http://www.aboutproperty.co.uk