Surprise as house prices rise in September

Posted: 27 Sep 2007 12:13:34 GMT

House price growth picked-up speed in September, against expectations.

House price growth picked-up speed in September, against expectations.

The Nationwide House Price Index revealed that prices increased by 0.7 per cent month-on-month in September.

This signals an acceleration on the 0.6 per cent growth figure recorded in August and puts the average property price at £184,723.

Fionnuala Earley, chief economist at Nationwide, said that house prices had "seemingly shrugged off the unsettled events of the past month" to record "a reasonably strong gain".

She also had more good news for mortgage holders, pointing out that her firm believes the base rate of interest may have peaked.

"Events of the past two months now appear to mark a clear turning point in the interest rate outlook. In early August, most observers were still predicting that the MPC would move to raise base rates to six per cent by November at the latest," said Ms Earley. "However, sentiment has changed significantly.

"The likelihood is now that we will see a cut in base rates early in 2008, which is good news for mainstream borrowers and those coming off fixed-rate deals," she added.

This positive outlook is not shared by all however, with Howard Archer from Global Insight predicting that the Bank of England will be cautious over any rate cuts in light of Nationwide's figures.

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