Figures released by the Office of the Deputy Prime Minister show that house prices rose 2.2% in October from the previous year, compared to 3.3% in
September. The pace of house price inflation has as a result hit a nine-year low on the government’s official house price measure.
House price inflation has been hovering in the range of 2-4% since July, as the market settles down after a marked slowdown since mid 2004. The August interest rate cut along with continued strength in employment has supported market conditions, with mortgage activity already back above its long-run average.
It is interesting to note that while overall house price inflation has slowed to less than the growth rate of wages back in July, in the case of first-time buyer properties, prices in October were still rising at 5% per annum, which is ahead of wage rises.
The figures from ODPM show that annual house price inflation remains above average in northern England, Wales and Scotland, while little change has occurred in southern England and the Midlands. Statistics based upon information from chartered surveyor estate agents indicate that the market is showing signs of improvement across the country in the past month as buyers return.
The Royal Institute of Chartered Surveyors expects the current upturn in housing market activity to be sustained into 2006 as the economy pulls out of the slowdown of the past year.