Housing Market Gathering Pace
NOVEMBER 30TH, 2006
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House price growth accelerated in November, rising 1.4% for the month, the Nationwide building society says.
The annual rate of house price growth rose to 9.6% from 8% in October, its highest level since February 2005, the Nationwide said.
The average UK house is now worth £172,185, and is rising in value at the equivalent of £41 a day.
Nationwide said the supply of homes for sale was at a two-year low and that the market was "fairly firm".
Rate rises Current housing market indicators are firm and do nothing to dent the prospect of further rises in house prices in the very short term
Fionnuala Earley, Nationwide
Continuing growth in UK house prices may come as a surprise to some, as it follows two hikes in interest rates.
Since August, UK interest rates have risen from 4.5% to 5% in a bid to quell inflation.
Nationwide noted a decline in buyer enquiries in September - following the first of the two rate hikes - but said this had proved "short-lived".
"Looking forward, current housing market indicators are firm and do nothing to dent the prospect of further rises in house prices in the very short term," Fionnuala Earley, Nationwide group economist said.
However, the Nationwide did strike a note of caution, looking ahead to 2007 and beyond.
"Affordability must eventually bite, which limits the prospects for rapid nominal house price gains to continue far into the future."
"However, the likelihood and size of any fall will depend on how overvalued the market already is," Ms Earley said.
The Nationwide added it had estimated in June that there was a "modest level" of overvaluation.
Earlier this month, David Miles, chief UK economist at Morgan Stanley, suggested that substantial house price falls were likely over the next few years.
