House prices reach new record high

The average house price in the UK reached a record high of £225,109 in September, according to Halifax’s latest house price index, with prices supported by a shortage of properties for sale and low unemployment. The bank said that the annual rate of UK property price growth was 4% higher than in the same period last year and 0.8% higher than in August. House prices in the three months to September were 1.4% higher than in the previous quarter, the fastest rate of growth since February. Total property sales remained flat, however, although they exceeded 100,000 for the eighth consecutive month. Buyer demand could dampen going forward, Halifax said, due to “increasing pressure on spending power” and affordability concerns. Nationwide Building Society’s house price index, released at the end of September, painted a more subdued picture, showing that annual house price growth remained stable in September at 2%, down from 2.1% in August. The building society said that the average price of a property in the UK is currently £210,116, marginally lower than in August when the average price was £210,495. Property prices in the capital have fallen for the first time in eight years, and are down 0.6% year on year, with London the weakest performing region for the first time since 2005. Nationwide expects a quarter percentage point rise in the Bank of England base rate at the next Monetary Policy Committee (MPC) meeting in November, but sees any increase only having a “modest” effect on already stretched UK households. This is mainly due to the fact that the majority of new mortgages taken out in recent years have been fixed rate deals, meaning homeowners are protected from higher monthly payments when interest rates rise.