The monthly house price surveys conducted by the Halifax and Nationwide indicate that the housing market is set for a period of steady and sustainable growth over the remainder of the year and during 2001.
The Halifax reports that house prices fell by 0.4% in October and the annual rate of house price inflation has decreased from a peak of 16% in January to the current rate of 5.7%.
Despite the fall in October, prices have risen in the four months prior to this.
Although growth has been markedly slower than in the second half of 1999, housing demand should continue to grow during 2001 due to the underpinning effect of the healthy economy.
The Nationwide reports that this period of slower growth has occurred because consumers, and especially first-time buyers, have proved unwilling to pay inflated prices.
It reports a growth of 0.9% in house prices during October, which indicates a return to growth after the decline seen in the summer.
The number of first-time buyers remains at around 46,000 a month – 10,000 fewer than this time last year.
David Parry, divisional director of Nationwide, said: “Price increases in the last two months have now more than offset the decline seen in the summer.
“This is further evidence that the market was pausing for breath after prices rocketed at the beginning of the year.”