City analysts have predicted a cut in interest rates as early as this summer as official figures showed weaker economic growth than expected at the start of the year. In a set of figures that will make gloomy reading for chancellor Gordon Brown, the Office for National Statistics (ONS) revised first quarter gross domestic product growth to 0.4 per cent on the quarter and 2.1 per cent on the year, compared with expectations of 0.5 per cent and 2.7 per cent.
However, annual growth was increased for the last three years, up 0.2 percentage points to two per cent in 2002, up 0.3 percentage points to 2.5 per cent in 2003 and up 0.1 percentage points to 3.2 per cent in 2004. With each set of weak economic data, the pressure is growing on the Bank to lower borrowing costs. Earlier, Nationwide said June’s rate of annual house price inflation of 4.1 per cent was the lowest for nine years.
UK house prices cooled in June, reducing annual price inflation to its lowest level in nine years, according to the latest figures published by Nationwide. Some have held the World Cup partly responsible for the sudden sag in the market. The 0.2 per cent drop in prices followed a 0.3 per cent rise in May and reduced year-on-year growth to 4.1 per cent, compared with 19 per cent this time last year. This, said the Nationwide, was the slowest rate of growth since July 1996. The average property now costs £157,791. London remained the most expensive place in the UK to buy, with an average property price of £241,344.
DIYers go over budget
Enthusiastic home improvers have forked out close to £4 billion more than they budgeted for on over-ambitious home building projects, according to new research from ING Direct. Inexperience and a lack of technical knowledge have contributed to nearly a third (29 per cent) of the home improvement projects completed in the last three years exceeding their initial budget. Time, that other precious commodity, is also being wasted with 30 per cent of home improvers admitting that the work was finished late and one in 20 (six per cent) exceeding their initial schedule by more than three months.
Brits have spent a total of £76 billion on home improvement projects, more than a third (38 per cent) of which were undertaken by professional builders. Four million of these home improvers (29 per cent) overspent on these projects by an average of £908 each.
These problems occur because home owners’ expectations often exceed their capabilities. A quarter (25 per cent) of those that went over schedule or budget say that they underestimated the scope of the project when they started out and nearly one in ten (eight per cent) admit that it was hard to maintain their momentum once the work had started.
ING Direct CEO Lindsay Sinclair says, ‘The vast majority (94 per cent) of home improvers agree that it’s important to save up for home improvements, but only half (50 per cent) actually use savings to fund the work. The large number of projects that go over budget demonstrate just how important it is to have buffer savings in place before starting out.’