House prices continue to rise
House price inflation has slowed a little, but prices are still rising, government figures showed today. Annual house price inflation went up by 5.2% in June, compared with 5.6% in May, according to the Department for Communities and Local Government (DCLG), formerly the Office of the Deputy Prime Minister.
The average UK house had a price tag of £190,883 in June, the figures showed. Inflation dropped slightly across the UK as a whole, but in Northern Ireland prices rose by an impressive 18.5% in June, up 0.5% on the previous month. Wales also saw an increase from 4.8% in May to 8.2% in June.
In England, though, inflation slowed to 4.6% from 5.1%, and in Scotlandprices rose by 8.5% compared with 9.7% the previous month.
The average price paid by first-time buyers across the whole of the UK was £149,215 in June, 6.8% higher than last year, while the average price paid by former owner-occupiers was £208,657, an increase of 4.7%.
The DCLG's figures are based on information provided by around 50 mortgage lenders and are not seasonally adjusted to take into account traditional highs and lows in the property market.
Davis Stubbs, economist at the Royal Institution of Chartered Surveyors (Rics), said: "While the pace of house price inflation on the government's official measure has slowed somewhat, significant momentum remains in the market, which has strengthened consistently since last August's interest rate cut."
Howard Archer, chief economist at financial analyst Global Insight, said he expected house prices to "firm" in the near term due to a shortage of properties for sale in some areas, such as London and the south-east. But he added: "Even if house prices do see significant strength in the near term, we continue to believe that affordability constraints will cause them to ultimately settle down into an extended period of relatively modest rises."
He added that higher interest rates, following this month's quarter point base rate rise to 4.75% and the likelihood of further increases, would add to affordability pressures.
"Many potential buyers will be alarmed by the Bank of England's indication that more interest rate hikes are probable. We think these mounting affordability pressures will outweigh the support to the housing market coming from high employment and a relatively healthy economy," he said.