Commenting on the latest figures, Martin Ellis, chief economist, said: "House prices continued to rise at a strong pace in November although the monthly increase was significantly lower than the record rises in September and October. The annual rate of house price inflation, however, has remained close to 30% as the combination of low interest rates and low unemployment, and a persistent shortage of properties available for sale, has maintained the upward pressure on prices.
“Other key indicators confirm the ongoing robustness of housing market activity. Bank of England figures show that the number of mortgage loans approved for house purchase bounced back in September and October following signs of weakening during the summer. Property transactions in England and Wales have been at their highest level since 1989 over the last few months with 417,000 transactions in the third quarter, according to the Inland Revenue. Transactions are on course to total almost 1.6 million in 2002, exceeding every other year since 1988.
“The difficulties that increasing numbers of potential first-time buyers are experiencing in entering the housing market in the south, as a result of the rapid rise in house prices over the last few years, will constrain demand and cause the pace of house price inflation to slow from its current rate over the coming 12 months. There is, however, little prospect of either a substantial rise in interest rates or unemployment over the next year. Affordability remains very good as well with mortgage payments representing 15% of gross earnings for a typical new borrower, one of the lowest percentages since 1984 and significantly below the long run average of 22%. With these favourable factors set to remain very much intact over the foreseeable future, house prices are expected to continue increasing although at a slower pace than in recent months.”
