House prices 'continue to cool'

There is increasing evidence that the property market is slowing

UK house price inflation is continuing to slow, according to the latest set of government figures.

Prices rose by 0.3% in September, the Department of Communities and Local Government (DCLG) said, compared with rises of 0.5% in August and 2% in July.

The annual rate of house price inflation also fell to 10.8%, down from 11.3% in August.

The figures are based on actual completions and so lag behind other house price surveys.

DCLG calculated that the average price of a home in the UK is now £220,111.

Growing consensus

The rate of annual house price growth slowed to 10.1% in England, 12.5% in Scotland and 6.2% in Wales, the DCLG said.

This... is the prelude to a sharper reduction in house price growth David Stubbs, Rics senior economist

Northern Ireland continued to have the strongest rate of annual price growth at 42.7%, but this was down from 45.4% in August.

In London, often seen as the driving force of the housing market, annual house price inflation fell from 17.2% to 16.5%.

The figures are the latest survey to indicate that house price growth is slowing.

Last week, Britain's biggest mortgage lender Halifax said house prices fell by 0.5% in October, taking the annual rate of inflation down to 8.9%.

The Royal Institution of Chartered Surveyors (Rics) said the cost of property fell at its fastest rate for two years during September, while the number of people looking to buy a new home dropped for the 10th month in a row.

'Marked cooling'

"Although today's numbers show annual house price growth remaining in double digits, the slowdown in the UK housing market can clearly be seen," Rics senior economist David Stubbs commented on the DCLG figures.

"This is the smallest rise for seven months and is the prelude to a sharper reduction in house price growth which is happening right now.

"Indeed, these figures show that house prices fell in five out of the twelve regions of the UK during September," he added.

The most recent research from the Nationwide building society showed what it called a "surprisingly strong" increase of 1.1% in house prices in October.

But it suggested the rise was a temporary change of direction and said it was "unlikely to mark the start of a new upward trend".

Howard Archer, chief UK and European economist at Global Insight said the DCLG data "added to the overall impression that housing market activity and prices are now losing significant momentum".

He blamed slowing activity, increased affordability pressures and tightening lending practices.

"We expect these factors to increasingly bite over the coming months, leading to further marked cooling in the housing sector," he added.