Halifax’s monthly price index has revealed house prices rose by 1.7% in October.
There have, however, been indications of a weakening in activity at earlier stages of the house-buying process, suggesting that house price inflation may slow in the coming months.
The latest RICS survey shows signs of a slowdown in activity with virtually no change in sales between Q2 2006 and Q3 2006. The House Builders’ Federation has also reported an annual fall in the numbers looking at new homes for the third time in four months.
Sound economic fundamentals and a lower stock of properties available on the market have put upward pressure on house prices. The UK economy continued to grow at slightly above its long-term average pace of 0.6% per quarter in Q3 2006.
Significantly higher utility bills and the increase in mortgage rates over recent months are expected to constrain housing demand, causing the annual rate of house price inflation to ease over the coming months.
Martin Ellis, Halifax’s chief economist, says: “There have been indications of a weakening in activity at earlier stages of the house buying process, suggesting that house price inflation may soon begin to slow.”