However, the CLG admitted that house price inflation fell, along with house price inflation in the capital, brought on by the recent turmoil affecting the mortgage sector. UK annual house price inflation fell to 10.8 per cent – a fall of 0.5 per cent from the August findings – while annual house price inflation in London dropped to 16.6 per cent, from the 17.2 per cent recorded in August.
David Stubbs, senior economist at the Royal Institution of Chartered Surveyors (RICS), said: “Although today’s numbers show annual house price growth remaining in double-digits, the slowdown in the UK housing market can clearly be seen. This is the smallest rise for seven months and is the prelude to a sharper reduction in house price growth, which is happening right now. Indeed, these figures show that house prices fell in five out of the 12 regions of the UK during September.”
The CLG reported that UK inflation for the three months to September reached 11.5 per cent – 17.5 per cent in London. However, Stubbs expected the market to level out over the next 12 months. He added: “With interest rates at 5.75 per cent and the impact of the credit crunch reducing lending options from many would-be buyers, the slowdown in both activity and price growth is unsurprising. RICS expects house prices to be flat in 2008 despite the prospect of lower interest rates.”
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