House price growth 'rises above expectations'

28-Dec-2006

First time buyers may be interested to hear that house price growth this year has risen above general expectations, according to the Nationwide house price index.

Figures for December suggest that property prices increased by 1.2 per cent in December leaving the annual rate of house price inflation at 10.5 per cent.

This means that house prices rose at three and a half times the rate of inflation in comparison with 2005, defying predictions that growth rates would remain at single digits.

Nationwide believes that rising demand from first time buyers is one of the principle reasons for the increasing rates of inflation.

For our first time buyers guide to buying a property click here.

Fionnuala Earley, group economist at Nationwide, says that the house price momentum will flow into 2007 supported by a buoyant economy.

"We can therefore expect to see a few months of double-digit annual house price inflation in the first half of the year," she says.

"However, increasingly poor affordability, the impact of higher mortgage rates and the likelihood that fewer parents will be willing or able to help their children out will cause the rate of house price growth to move back into single digits in the latter part of the year," she adds.

The Nationwide index states that average prices in the UK are now £173,746, which is slightly more than property values given in research from the Bank of Scotland yesterday.

It stated that homes have risen by more than a quarter (27 per cent) over the past year, with typical prices in the capital at about £202,941.

For advice on first time buyer mortgages or to find out how much you can borrow and how much it would cost you, contact a good mortgage broker.

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