House prices up, but instructions 'low'
01 November 2007
House prices in the UK climbed in October at their fastest rate for four months, latest figures from Nationwide reveal.
Property prices rose by 1.1 per cent this month, with the average house price rising to £186,044, the mortgage lender stated.
Year-on-year results saw house prices up by 9.7 per cent since the same time in 2006, rising 0.7 per cent from nine per cent recorded last October.
Although house prices appear to have risen strongly, Nationwide warned that underlying market activity is slowing, and demand is trailing off somewhat.
"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," said Nationwide chief economist Fionnuala Earley.
"The overall result is that the stock of unsold homes is still relatively low, and this is providing some residual support to prices," she added.
Meanwhile, Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors said: "The endless talk of the demise of the property market is, at the very least, a little premature. The 1.1 per cent gain in prices in October represents the highest month-on-month increase this year and provides a stark contrast to the fears of outright price declines.
"We still expect the pace of house price inflation to gradually slacken as the credit crunch restricts the availability of mortgage finance, particularly to 'higher- risk' borrowers and the economy more generally slows. But today's data strengthens our conviction that the authorities will not be in a rush to follow the US Federal Reserve in lowering interest rates."
