Figures released by the Office of the Deputy Prime Minister today show that August’s house prices rose 2.8% from year ago levels, compared to a rise of 4.0% in July 2005. The pace of house price inflation is the slowest in over nine years, since recording a rise of 1.1% in Q2 1996.
House price rises have slowed from 13.6% in August 2004 due to the impact of last year’s rising interest rates. House price rises are now below 1% per annum in all the southern English regions, while remaining above 5% in the Northern English regions and Wales. Double digit house price rises are still being recorded in Scotland and Northern Ireland, reflecting in part a catch up with the rest of the country.
Whilst there is speculation that house price inflation may reach zero soon, this has been thrown into doubt by the modest upturn in housing market activity following August’s interest rate cut. Chartered surveyors estate agents indicate that buyer purchase enquiries have risen as confidence is boosted by lower interest rates. Speculation has grown that interest rates may fall again, possibly as soon as November. If this proves correct, Royal Institution of Chartered Surveyors believes this is likely to sustain a modest revival in housing demand into the New Year.