House prices show sharp July rise

The average house now costs more than £177,000

Demand for larger properties pushed house prices up by 2.1% in July, latest government figures show.

The average house price reached £177,474 in July, the government said, with annual inflation running at 14.3% - up from 13.9% in the year to June.

The figures collated by the Office of the Deputy Prime Minister (ODPM) suffer a time-lag compared to some other market surveys.

The Halifax and Nationwide both said the market slowed in August.

The ODPM said detached property led the way in July, with average prices rising by 3.2% over the month.

There is no doubt that the housing market has cooled between the end of July and the beginning of September Ray Boulger, Charcol

Semi-detached and terraced homes increased by 2.4% and 2.3% in price in the same period.

Regional variations

Wales once again showed the sharpest rise in prices, as annual house price inflation in the principality increased to 30.4% in July from 26.1% in June.

inflation in Scotland proved slightly less fierce, slipping from an annual 23.8% in June to 22.3% in July.

In England, annual inflation rose slightly from 13.1% in June to 13.4% in July, with dwellings in the North East, North West and Yorkshire all averaging rises of more than 25%.

However, London and the South East lagged behind the rest of the country, with annual inflation below 9%.

Rate impact

Overall, the rise in prices recorded by the ODPM during July came as little surprise.

The figures are roughly in line with those produced by the Halifax and Nationwide for the same month.

Since then, however, both have indicated that house price inflation slowed dramatically during August, showing the impact of five interest rate rises since November.

This slowing in the market may have persuaded the Bank of England's Monetary Policy Committee to leave interest rates on hold last week.

"There is no doubt that the housing market has cooled between the end of July and the beginning of September, as happens during most years," Ray Boulger, technical director at mortgage broker Charcol.

"It will be interesting to see if buyers show renewed interest in September, a time when traditionally the housing market picks up again."