House prices continued to rise over the summer despite concerns about the market overheating, according to the latest figures released by Nationwide and Halifax.
Nationwide said the average British house price rose 1.1% in August and now costs £129,258 – £1,000 more than in July and more than four times the average annual salary. The mortgage lender has revised its forecast for growth during 2003 from 10% to 13%.
Alex Bannister, group economist at Nationwide, said: “Although house price growth is set to slow, the current strength in the market is likely to be sustained for a number of months.”
He explained house prices are well supported by a weak supply of new property, low real mortgage rates, continued economic growth and poor returns from other asset classes.
Halifax said house prices had increased by 1.3% over the same period, with the average price now reaching £133,908. It added that the end of the war in Iraq had boosted confidence, while the highest level of employment on record and the lowest interest rates since the 1950s continued to underpin strong housing demand.
Hometrack, which monitors the London housing market, has also revised its house price predictions for the year to 0.0% from -5%, in January. During August, five London boroughs saw price rises, eight saw price falls, and 20 boroughs saw no change.
Sales prices as a percentage of asking prices has sunk to a low of 91% in April, but rose again in August to 92.3%.