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News: Strong house price growth ahead of plateau

House prices rose by 1.0% in September, the Halifax said today.  The annual rate, however, eased for the third successive month to 8.0%, the lowest rate since April 2006.

Whilst housing market activity remains firm, there are further signs that it has levelled out, said the lender.  The number of loans approved for house purchase has stabilised at around 120,000 (seasonally adjusted) a month in the three months to August, according to the Bank of England.  The latest RICS survey reported that completed property sales eased marginally in August for the second successive month.

All houses, all buyers index (1983=100)

Index (seasonally adjusted)

586.4       

Monthly change

1.0%      

Annual change

 8.0%

Standardised average price (seasonally adjusted) 

£181,186

Higher mortgage rates following the Bank of England's rate rise in August and the increase in fixed rates over the past five months are expected to dampen housing demand over the coming months.  The recently announced increases in utility bills will also put pressure on householders' finances, further curbing housing demand.  As a result, house price inflation is expected to moderate over the remainder of the year.

The nine English regions have experienced remarkably similar house price gains in the last 12 months with all regions experiencing rises of between 5.5% and 8.5%; the narrowest range recorded since the Halifax House Price Index began in 1983. Prices have risen most strongly in Northern Ireland (30%) and Scotland (14.5%) over the past year.  All other regions have recorded single digit house price inflation.

Annual house price inflation in Greater London eased from 10.9% in Q2 to 8.5% in Q3, indicating that the boost to prices in the capital from this year's record high City bonuses has diminished.

The ratio between prices in the south and north increased marginally for the second successive quarter in 2006 Quarter 3, indicating that the north/south divide is beginning to widen again following four years of almost continuous narrowing. 

Martin Ellis, Chief Economist, said, “We expect increased utility bills and higher interest rates to curb housing demand over the coming months, causing annual house price inflation to ease between now and the end of the year."

Region

Index
1983=100

Standardised
average price
£

Quarterly change 
%

Annual change
%

North

570.6

143,970

1.4

5.5

Yorks & the Humber

598.8

138,268

-0.8

7.9

North West

565.3

144,590

1.7

6.4

East Midlands

592.5

154,877

-0.8

5.7

West Midlands

604.2

170,518

0.5

7.1

East Anglia

580.8

174,722

0.2

8.4

South West

592.6

195,930

1.5

7.8

South East

573.2

232,645

1.5

7.7

Greater London

676.1

269,188

1.2

8.5

Wales

582.3

150,687

0.8

2.9

Scotland

423.5

122,511

0.7

14.5

Northern Ireland

650.9

167,391

6.6

30.0

UK

580.7

179,425

0.7

8.0

 

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