House prices rising steadily

4 October 2006

There’s yet more evidence that house prices are continuing to rise steadily. New figures from the Halifax – the UK’s biggest mortgage lender – show that house prices rose by 1% in September and are increasing at an annual rate of 8%.

It’s the second month in a row that house prices have shown a strong rise. Halifax predicts that factors like rising incomes and – for the moment – comparatively low interest rates – will “continue to support a healthy housing market over the coming months”.

So far this year, UK house price inflation has exceeded analysts’ expectations. At the start of 2006, mortgage lenders the Halifax and Nationwide both predicted that prices would rise by low single digit figures. Now Halifax says annual house price inflation is running at 8%.

However, the mortgage lender said that higher utility bills and the Bank of England’s decision in August to raise interest rates by a quarter of a percentage point (to 4.75%) were likely to dampen demand in the housing market by the end of 2006.