House price rise set to reach double digits

Source: Times Online
2010/01/29

House prices rose by 8.6 per cent in January, compared with the same month last year, raising hopes that annual inflation will soon reach double digits for the first time in almost three years.

The last time the UK saw year-on-year house price rises of more than 10 per cent was in May 2007.

Month-on-month, average house prices increased by 1.2 per cent, according to the Nationwide, the UK’s largest building society, taking the average cost of a home in the UK to £163,481.

The three-month rate of change, usually a smoother indicator of the house price change than a single month's figures, dipped slightly from 2.3 per cent in December to 2.1 per cent in January, but the building society said this was mainly a result of small increases at the end of last year.

There was a surge of purchases at the end of 2009, unusual for the winter period, as buyers tried to beat the change in the stamp duty threshold brought back on January 1.

Martin Gahbauer, chief economist at the Nationwide, said: "Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007."

There was a surge of purchases at the end of 2009, unusual for the winter period, as buyers tried to beat the change in the stamp duty threshold brought back on January 1.

Martin Gahbauer, chief economist at the Nationwide, said: "Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007."