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UK house price growth slowed less than expected in August due to fewer subsidized home prices, despite lower household incomes and higher mortgage rates.

Home prices rose at an annual rate of 10 percent during the month, down from 11 percent in July but the tenth month in a row at a double-digit rate, according to mortgage provider Nationwide.

Home price growth was also stronger than a slowdown to the 8.9 percent expected by economists polled by Reuters.

Robert Gardner, chief economist at Nationwide, said the slowdown so far has been “modest” and, combined with a lack of inventory in the market, has meant price growth has “remained flat”.

Prices rose 0.8 percent between July and August, defying expectations that they will approach recession.

The recent rally has taken the average home price to a new high of £273,751, up by £50,000 from two years ago.

However, with mortgage rates rising rapidly, consumer confidence at a record low and real household income declining due to rising inflation, many analysts expect the housing market to calm down in the near future.

“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation expected to remain in the double digits next year,” Gardner said.

He added that higher mortgage rates would also have a “cooling effect on the market”.

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