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House price rises to continue but at lower annual rate

House prices have resumed strong growth after a temporary cooling over the summer with a downturn looking unlikely, according to Nationwide.

In its monthly house price index, the building society says the market saw prices rise by an average of 1.4 per cent in October and 24 per cent over the year. The average price of a home is now £113,665.

Nationwide does, however, predict that house prices will not increase at the same rate over the coming year. But it believes there will be strong growth despite the risk of unemployment because interest rate rises are unlikely.

The society says the South-east trailed behind the rest of the country with weaker price rises than elsewhere. It attributes this to high-profile job losses in financial services which it says are indirectly affecting consumer confidence. It says stockmarket falls are likely to be behind prices levelling off in the most expensive parts of London.

It says first-time buyers being priced out of the market is contributing to a tailing off in the South-east.

Nationwide group economist Alex Bannister says: “The rise in prices in October was undeniably robust – the annualised rate of growth was over 18 per cent – but it was the lowest month-on-month change since March.

“Between April and August, there had also been a reduction in the number of house purchase loans, suggesting activity in the market is also beginning to cool. However, September saw the number of loans for house purchase rebound and, with households remaining highly confident about the outlook for their finances, a sharp slowdown remains unlikely in the near term.”


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