Mortgage Industry News

← Back

Mortgage holders buoyed by new rise

Date: Wed, 06 Oct 04 Analysis

Following consecutive months of dropping housing prices, the average cost of a house in the UK jumped 1.4 per cent last month.

According to mortgage lender Halifax this means the average cost of a house in the UK now stands at £161,746.

The September price rise means that house prices now stand 20.5 per cent higher than last year - although the growth in prices over the last three months is less than half what it was in the preceding quarter.

Additionally, as the rate of growth has slowed, the gap (in percentage terms) between the cost of property in the north and south of the country is smaller than it has been for almost six years.

However, it was a the south that drove the turnaround in prices. Halifax revealed that London and the south-east represented 80 per cent of the 1.4 per cent increase in the national average house price.

"Whilst prices continue to rise more rapidly in the north, there are now signs that house price inflation in this part of the country is also slowing following a period of very rapid growth as first-time buyers increasingly face similar difficulties to those in the south in buying a home," noted Martin Ellis, Halifax chief economist.

"We expect this trend to continue over the coming months, with prices slowing most markedly in the north, contributing to slower UK house price inflation," he added.

The mortgage lender quashed rumours of a house-price collapse, saying: "The market remains underpinned by a strong labour market, favourable affordability when mortgage-servicing costs are compared with income and a shortage of housing supply.

"As a result, we expect house prices to continue to rise, albeit more slowly than in the recent past."

© 1998-2005 DeHavilland Information Services plc. All rights reserved.

Endsleigh Insurance Services Limited is authorised and regulated by the Financial Services Authority. This can be checked on the FSA Register by visiting its web site at www.fsa.gov.uk/register.
Endsleigh Insurance Services Limited. Company No: 856706 registered in England at Shurdington Road, Cheltenham Spa, Gloucestershire GL51 4UE.