House prices up in August
Posted: 31 Aug 2006 13:07:32 GMT
House prices in the UK increased by 0.8 per cent in August, according to new research.
Nationwide's monthly house price index shows that the annual rate of growth now stands at 6.6 per cent which is higher than at the same time last year.
Although the average house price actually went down, this was far lower than expected for the August dip and coupled with the usual seasonal adjustment that is applied to indexes, overall strong growth was apparent.
Fionnuala Earley, economist for Nationwide, stated: "This is the fastest annual rate of growth since April 2005 and almost three times faster than at this time last year. The underlying market remains fairly firm with prices increasing by 0.8 per cent in August.
"The typical house in the UK now costs £167,721. This is £10,412 higher than August 2005 and is the equivalent of a rise of almost £30 per day."
The August interest rise will not show its effects until the September and October figures, however, analysts believe that caution is expected rather than panic.
Ms Earley doesn't believe that a repeat of the 2004 slowdown is on the cards: "There are three main reasons for this. First, current macroeconomic conditions suggest fewer increases in base rates.
"Secondly, fixed mortgage rates have moved more gradually, and thirdly, demand, particularly from the investment sector, is likely to remain fairly supportive."
However, risks do still remain and the report states that higher interest rates will make it harder for first-time buyers to get on the property ladder. In turn this could put a squeeze on house prices.