September house prices defy the credit crunch

28 September 2007
In keeping with the trend of recent years, September house prices have continued to grow throughout September, despite the sub-prime crisis in the US and the knock-on effect of the Northern Rock fiasco, according to research from Nationwide Building Society.

Defying unhopeful expectations in the wake of Northern Rock and in spite of rising mortgage costs, house prices have risen by 0.7% since August.

However, while house prices have largely avoided its wrath, the effects of the debacle can still be seen in other markets; credit is becoming increasingly hard to come by as lenders tighten their belts, and despite a continued growth in the value of property, the trend is at it’s weakest since July 2006.

Commenting on the figures, Fionnuala Earley, Nationwide's Chief Economist, said: “House prices recorded a reasonably strong gain of 0.7% between August and September, seemingly shrugging off the unsettled events of the past month. Despite this increase, the 12-month rate of house price inflation came down from 9.6% in August to 9.0%, as we are now entering a period during which house prices gains were particularly strong in 2006. This brought the average price of a typical UK property to £184,723.

“The 3-month on 3-month rate of price growth – often the smoothest indicator of underlying momentum – slowed from 2.0% to 1.6%, the lowest level since July 2006. Overall, house prices defied the gloomy predictions of some recent headlines, but their underlying growth is still on a decelerating trend.”

While buying a house is becoming increasingly difficult with rising interest rates and property value, the interest outlook is not looking as bleak as it was recently, which will offer some respite to first time buyers clamouring to get on the property ladder.

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