All Houses, All Buyers Index (1983=100)
Index (seasonally adjusted) 544.4
Monthly Change 0.0 per cent
Annual Change 3.9 per cent
Standardised Average Price (seasonally adjusted) £168,210
Key Points
*House prices in the UK were unchanged in October. The pattern of price movements during recent months shows that the market has strengthened, but the static level of prices in October suggests that we are not poised for another sustained period of sharply rising property values.
*On an annual basis, house prices were up 3.9 per cent, significantly below the 18.5 per cent recorded in October 2004.
*Housing market activity continues to improve. The number of mortgage approvals to fund house purchase rose for the third successive month in September, according to the Bank of England, and was 24 per cent higher than in September 2004. Buyer enquiries for property increased for the fourth successive month in September, according to the latest RICS survey, marking the longest run of rising enquiries in two years.
*Continuing economic growth, the high level of employment - which reached a record level of 28.76 million in the three months to August 2005 - and a boost to household sentiment regarding the future direction of interest rates following August's base rate cut are all supporting housing demand.
*This year's slowdown in the pace of UK economic growth and the ongoing historically high level of house prices relative to average earnings are, however, expected to curb the recent improvement in housing demand and prevent a marked pick-up in prices.
Commenting, Martin Ellis, Chief Economist, said: "House prices were unchanged in October following increases of over 1 per cent in both August and September. The overall pattern of price movements over the past few months shows that the market has strengthened compared with earlier in the year, but the static level of prices in October suggests that we are not poised for another sustained period of sharply rising property values.
"Continuing economic growth, the high level of employment and a boost to household sentiment regarding the future direction of interest rates following August's base rate cut are all supporting housing demand. This year's slowdown in the pace of UK economic growth and the ongoing historically high level of house prices relative to average earnings are, however, expected to curb the recent improvement in housing demand and prevent a marked pick-up in prices."
Activity continues to improve ……
Key indicators provide further evidence that housing market activity continues to recover. For example, Inland Revenue figures show that the number of property transactions increased by 16 per cent between the second and third quarters of 2005.
The number of mortgage approvals to fund house purchase rose for the third successive month in September, according to the Bank of England. The number of loans, at 107,000, on a seasonally adjusted basis, was 24 per cent higher than in September 2004 and was at its highest level since June 2004.
Buyer enquiries for property increased for the fourth successive month in September, according to the latest RICS survey, marking the longest run of rising enquiries in two years. Halifax Estate Agents, along with other agents, have experienced a rise in sales in recent months.
Economic fundamentals underpinning the market are sound ……
Sustained economic growth, high levels of employment and healthy earnings growth are all supporting housing demand.
The UK economy continues to grow but preliminary ONS figures confirm that overall activity expanded at a pace below its long-term average rate in 2005 Quarter 3 for the fifth successive quarter. The quarterly rise of 0.4 per cent was slightly below the 0.5 per cent increase in Quarter 2. Annual GDP growth, however, increased from 1.5 per cent in Q2 to 1.6 per cent in Q3. Historically, the UK economy has grown at an average rate of 0.6 per cent a quarter and 2.5 per cent per year.
Despite the slowdown in economic growth over the past year, the number of people in employment has continued to rise, reaching a record level of 28.76 million in the three months to August 2005. This was 103,000 up on the previous three months and 345,000 higher than a year earlier.
Average earnings increased by 4.2 per cent in the three months to August 2005, comfortably exceeding the 2.5 per cent rise in consumer prices in the year to September 2005.
