[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 7 December 2006, 08:56 GMT
House price inflation 'picks up'
Estate agent's window
House prices are still rising across the UK
Annual house price inflation rose to 9.6% in November, according to the latest survey from the Halifax bank.

It said prices were 1.7% higher than in October, pushing the cost of the average UK house to 187,995.

The findings are the latest indication that house prices are still growing strongly, despite the recent increases in interest rates.

However, the Halifax said it expected the housing market to cool down over the coming months.

"The marked slowing in real average earnings growth over the past six months, and a squeeze on households' discretionary income due to the substantial increase in utility bills during the last year, should temper housing demand," said Halifax chief economist Martin Ellis.

"As a result, we expect house price inflation to ease over the coming months."

Strong demand

Many commentators have been saying exactly this since the start of 2006 but their expectations have, so far, been confounded by experience.

House price inflation graph

The Halifax's measure of house prices now coincides precisely with that of the Nationwide, and has been backed up by other surveys such as those from the DCLG and the Land Registry.

At the same time, new mortgage approvals are at their highest since the end of 2003, suggesting strongly that there will be no let-up in demand from house buyers in the coming months.

According to the Bank of England, 128,000 new mortgages were approved for house buyers last month.

Milan Khatri, RICS chief economist said: "House prices are now up more than 6% in the space of just 4 months.

"Prices for first-time buyer properties are rising more quickly than the rest of the market and are up almost three times as fast as average wages, squeezing buyer affordability," he said.

Straws in the wind?

The buoyancy of the property market has been due in part to the continued steady growth of the economy and the further increase in the number of people in jobs.

But the Nationwide pointed to other indicators, suggesting that the property market may start to slow down slightly.

It quoted the latest survey of the Royal Institution of Chartered Surveyors, which pointed out that enquiries from buyers had fallen below the levels seen during the summer.

And the House Builders' Federation reported that October was the third month in a row that there was a drop in the number of people looking at new homes.

Howard Archer, chief economist at Global Insight, said that if house prices continued to post sharp rises in the coming months, the Bank of England would face increased pressure to raise interest rates further in 2007.




RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific