October house prices rise shocks property analysts


Property analysts have been shocked by the latest house price inflation figures from Nationwide Building society, showing that the cost of the average home increased by A?1,300 in October.

The building society recorded a 1.1% increases in prices, the largest monthly rise this year.

On this basis, annual house price inflation stands at 9.7% in October (compared with 9% in September), with the cost of the average property rising to A?186,044.

Taking a three-month measure (which is regarded as a more accurate method of reviewing house price movements), prices in the three months to October rose by 1.9%, as compared with 1.7% in the three months prior to September.

The Nationwide survey contradicts figures released this week by Hometrack, the property information website, which show house prices falling by 0.1% during October.

In addition, the Bank of England has just released data for September confirming that approvals for mortgages fell to their lowest level since July 2005.

According to Nationwide’s chief economist, Fionnuala Earley, the market is slowing down, despite the October rise.

She points out that “slowing demand will not have an immediate impact on prices if homeowners are in no rush to sell….different factors could be driving the low level of instructions, including a reluctance to trade up amid current uncertainties and the fact that low unemployment is limiting the number of forced sales”.

As a result, “the stock of unsold homes is still relatively low, and this is providing some residual support to prices”.

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