'Steady rise' in house prices

UK house prices continued to increase at a steady pace during July, with the cost of property rising by 1%, according to the Nationwide Building Society.

But annual house price inflation, which measures price increases year-on-year, fell for the fourth month in a row, dropping to 17.9% from 19.2% in May, according to Nationwide.

The cost of property has now risen by 7.7% during 2003, the survey suggests.

That means the average house has gone up by about £11,000 to £128,251.

First-time buyers

The survey also showed the lowest level of first time buyers for 20 years, with people being put off from entering the market by huge down payments.

The Nationwide figures contrast with a survey released on Monday, which showed house prices are stagnating.

According to the property website Hometrack prices remained stable for the second month in succession.

The survey showed house prices in the south of England are falling but the rate of decrease slowed in July.

Affordability

Nationwide said house prices continued to climb in the south, but it expected the rate of increase to slow further in the face of weaker pay and job prospects.

Nationwide group economist Alex Bannister said: "As has been the case for the last six to 12 months, prices are rising fastest in the regions where affordability is less stretched such as the North and Yorkshire and Humberside.

"House price inflation remains lower in more expensive regions such as London and its immediate commuter belt."

Activity was broadly mirroring price growth, he added, with fewer properties being sold in London and the South East.

Trading up

The typical first-time buyer now put down a 12% deposit, compared with one of just 5% in the late 1980s, the building society said.

But deposits vary from 11% or £7,363 in the North to a huge 17% or £29,835 in London.

Even in the outer Metropolitan area and the South East first-time buyers are still having to find around £20,000 in order to purchase their first home.

During June there were 31% fewer first-time buyers getting on to the property ladder, Nationwide said.

Mr Bannister said many first-time buyers were having to club together with friends or borrow money from parents to come up with a deposit.

The number of homeowners trading up remained above the five year average.