Latest figures from the Land Registry show average property prices increased by 10.6% from £146,150 in Q3 2002 to £161,665 for the same period in 2003.
These figures are broadly in line with the new monthly house price index from the Office of the Deputy Prime Minister, which put house price inflation for September at 10.9%, down from 14% in August.
However, both sets of data are more pessimistic than the monthly figures from Halifax and Nationwide. Halifax claimed the annual change in house prices was an increase of 16.7% in October, up 1.2% on September, and Nationwide”s rise to 16.1% is 2% higher than it was in September.
Nationwide said that further interest rate rises could affect borrowers” expectations, but would not necessarily damage the market.
Alex Bannister, group economist at Nationwide, said: “This latest relatively rapid rise in prices, combined with a record level of house purchase approvals in September indicates that some strength has returned to the housing market. Clearly interest rates could rise [again] before the end of the year, and if this occurs it is likely to change purchasers” expectations.
“However, for most borrowers, in cash terms a plausible increase in rates (to 5%) is unlikely to eat too far into disposable income. What happens to rates is not likely to be pivotal for the housing market. Rate rises will increase payments and cause the market to slow but lessons from the last cycle show that price slumps are more related to labour market developments and policy changes. Decisions on taxation in next year”s budget could prove considerably more influential.”
