New figure supports strengthening housing market

Posted: 22 Sep 2006 11:12:06 GMT

A report from Nationwide backs figures showing strong house price inflation in August this year.

A new report suggests that UK house prices are continuing to climb, despite the decision by the Bank of England in August to raise interest rates to 4.75 per cent

A new report into August's housing market from building society Nationwide suggests that house prices rose last month by a further 0.8 per cent and the annual growth rate accelerated during August to 6.6 per cent.

The report claims that this is evidence of a further strengthening of Britain’s housing market, though it stressed that the recent interest rate rise and a further increase predicted this November could signal a cooling of property prices across the UK over the coming months.

Nationwide suggests that the cooling during late 2006 and early 2007 will not be as severe as the house price slowdown witnessed in 2004.

Fionnuala Earley, Nationwide's Group Economist, commented: "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 - the equivalent of a rise of almost £30 per day."

The latest data supports evidence from the British Bankers’ Association, the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA), which indicated growth in house price inflation and buyer confidence throughout August this year.

Analysts have warned that house prices are continuing to grow faster than the rate of wage inflation in Britain, leaving a growing number of first time buyers prices out of the market.

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