RICs responds to ODPM house price data

The Royal Institute of Chartered Surveyors has responded to the Office of the Deputy Prime Minister house price data for September,

Milan Khatri, chief economist at RICs, says: “Figures released by the ODPM today show that house prices rose 3.3% from year ago levels in September, compared to 2.8% in August.

“The pace of house price inflation has strengthened from a nine-year low in August. Over the summer, there had been speculation that house price inflation would eventually turn to zero or even negative in 2005, which would have damaged consumer confidence. However, these latest statistics from the government, based upon a sample of 50,000 mortgage completions, adds to the evidence that the housing market is gradually firming.

House price rises have slowed from a high of 14.3% in July 2004, due to the impact of rising interest rates last year, but a firm labour market and the recent interest rate cut have helped reverse the declining trend.

“The turnaround is particularly evident across southern England, with house price inflation nudging upwards in London, the South-East and the eastern region, which previously all showed static prices. London, traditionally viewed as a leading indicator of national house price trends, recorded the largest annual rise in house prices in five months, at 1.9% in September. However, house price rises are still rising more quickly in the rest of the country, led by a 16.7% jump in Northern Ireland and 10.1% in Scotland.

“More timely statistics based on information from chartered surveyors estate agents indicate that would-be buyer confidence has increased since the summer, with October recording the largest rise in activity in two years. The chance of further near-term interest rate cuts has receded, but RICS expects to see further rises in housing demand into 2006 as the economy continues to grow at a moderate pace.”