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Last Updated: Monday, 13 November 2006, 10:43 GMT
House prices continue upward move
Browsing an estate agent's window
The market is still seeing strong price growth
UK house price inflation picked up in September, according to the Department of Communities & Local Government.

Prices rose by 0.8% in September, pushing the annual rate of house price inflation up from 7.7% to 8%.

The cost of the average UK property rose from 197,631 to 198,552 between August and September, the DCLG said.

Annual house price inflation rates rose in England, Scotland and Wales, but fell slightly, from a very high level, in Northern Ireland.

Wales saw the strongest growth spurt, with annual price inflation rising from 7% to 10.3% in September. In England, the rate increased to 7.2% from 6.6%, while in Scotland it edged up from 12.7% to 12.9%.

But in Northern Ireland, which has seen strong price growth this year, annual inflation fell from 26.6% to 23.6%.

House prices could well see further significant increases in the near term
Howard Archer, Global Insight

House price inflation rose in seven of the nine English regions and fell in the East and South East of England.

The buoyant London market continued to lead the way, with annual house price inflation hitting 9%.

Expectations exceeded

House price growth in 2006 has exceeded most analysts expectations, due to shortage of supply and strong economic growth.

Last week, the Bank of England raised UK interest rates from 4.75% to 5% to help quell inflationary pressures.

But according to Howard Archer, chief UK economist at Global Insight, the interest rate hike may not take the heat out of the housing market.

"Current elevated mortgage activity and a shortage of supply in many areas (especially London and the South East) means that house prices could well see further significant increases in the near term," Mr Archer said.

But over the long term Mr Archer added that he expected house price inflation to cool, due to the fact that property is becoming unaffordable to many.




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