UK annual house price inflation increases

10-Oct-2006

UK house price inflation rose again during August, potentially making the housing market more difficult for first time buyers.

According to data released by the Department for Communities and Local Government, during August, house price inflation rose to 7.7 per cent, with increases in London taking properties further from the reach of first time buyers.

House price inflation in London was 7.9 per cent in August, an increase of 0.8 per cent from the previous month.

"August was a strong month for the property market, with the annual inflation rate of 7.7% being the strongest since March 2005," said Milan Khatri, chief economist at the Royal Institution for Chartered Surveyors.

"First time buyer house prices rose at a slightly slower pace of 6.9% but are well ahead of average earnings which will stretch affordability for buyers," he added.

The average house price in the UK is now estimated at £197,631.

According to data recently released by the Council of Mortgage Lenders, recent first time buyers are now spending around 16 per cent of their earnings on mortgage interest payments.

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