House prices are certainly being affected by the current economic climate. That house prices are rising more slowly than the cost of living means that the property market is currently in a decline. This is a great time to buy for those wanting to get into the market, but not such good news for those who want to sell. It is also good news for house builders, who are seeing record profits as the demand for houses continues to increase and is magnified by the housing slump.
We also have to consider that interest rates will continue to rise and, whilst the recent rate rise has had a small effect overall, further increases could make it even harder for people to get into the market and slow sales even more.
It is an uncertain time for the housing market, which has not been helped by Mark Carney (Bank of England Governor) stating that the BoE are prepared for house prices to be cut by one-third! We certainly hope that really is worst-case-scenario planning!