House price inflation picks up

28 September 2006

According to the Nationwide’s monthly house price survey, house price inflation picked up in September – amid signs that last month’s rate rise had not cooled the property market. The figures show that house prices increased by 1.3% this month, following a rise of 0.8% in August.

Nationwide says the annual rate of growth accelerated to 8.2%; that’s the fastest rate since February. The mortgage lender says that the average house now costs £169,413, which is up almost £13,000 on the figure seen a year earlier.

Nationwide economist Fionnuala Earley said: “Just like the weather, the housing market was unseasonably warm in September as August’s interest rate hike did nothing to cool the rate of house price inflation.”

The Bank of England put up interest rates to 4.75% in August, with the City forecasting another rise as early as November.

Fionnuala Earley said she too expected a further interest rate increase in November, but stressed there was little chance of mortgage rates reaching the point where it became cheaper for households to rent.