House price inflation at 18-month high

14 November 2006
House prices rose faster than at any other time over the last 18 months in September, new data from the Department for Communities and Local Government shows.

While house prices in August fell 7.4 per cent in a year-on-year comparison with 2005, in September they rose eight per cent.

The average house price rose to £198,552 from £197,009 in August.

Annual house price inflation in London also hit an 18-month peak with an increase from 7.6 per cent inflation in August to nine per cent in September.

Recent surveys from mortgage lenders Halifax and Nationwide have indicated that higher borrowing costs after the interest rate hike in August did not immediately cool the housing market.

Some analysts suggest that if last week's interest rate rise does not cut prices, further rate raises could be on the Bank of England's agenda for 2007.

"If house prices continue to post sharp rises over the coming months, it will increase pressure for the Bank to lift interest rates further in 2007," said Howard Archer, economist at Global Insight.

track© Adfero Ltd