UK house price mini-boom may end soon, says Hometrack |
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Mon, 28 Aug 2006 10:20
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LONDON - House prices rose to their fastest level in over two years this August, according to a report released by property consultant Hometrack. Prices rose by 3.9 percent in August as compared to last year. This is the highest increase since a 4.6 percent rise recorded in September 2004.
House prices were up 0.4 percent over the July prices, thus taking the average price of a home to £167,200. The increase in prices came despite a quarter point increase in interest rates by the Bank of England. House prices in northern England remained unchanged, while they barely budged in eastern England, the east Midlands, northwest England and Wales. Hometrack says that the effect of the rise in interest rates will filter through and house prices will slow down.
"Whilst the recent rise in interest rates has yet to impact on the market surveys, the sensitivity of the housing market to interest rates means that the London-inspired mini boom of the last eight months is likely to run out of steam over the autumn," said Richard Donnell, Hometrack's director of research. He added that talk of further rise in interest rates would surely affect market sentiment.
"The recent rise in interest rates, and talk of further rate rises, is set to have a clear impact on market sentiment and levels of market activity," Donnell pointed out. "The result will be less upward pressure on house prices over the autumn and slower house price growth."
In the survey, Hometrack found that the north-south divide in house prices carried over in August with prices rising more in London than other regions. "Whether headline house prices rise by 4 percent or 6 percent over 2006 is largely down to the scale of growth in the London market," the survey said.
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House price inflation slightly up in Q4 2005 