House prices up 0.5% in September, FT index finds

Friday, 13 October 2006 12:00

House prices increased 0.5 per cent in September, according to the FT house price index

The FT survey - compiled by Acadametrics - is one of the most complete available on the UK market, taking account of prices at estate agents, mortgage valuations, and official data on completed sales.

And according to this measure, house prices in England and Wales are now 6.1 per cent higher than 12 months ago.

"Monthly house price growth has strengthened further in September to 0.5 per cent following a relatively weak period in June and July," said Gary Styles, economics director at Acadametrics.

"This strong performance has been led by London and supported by the south-east and south-west."

The FT index shows that annual growth in London, running at 9.8 per cent, far exceeds house price growth in other regions.

Most of the rest of England had growth of between four and six per cent, with only the East Midlands showing house price growth weaker than four per cent at 2.6 per cent.

"Low rates of housing turnover and poor new housing supply have continued to drive southern housing prices throughout this year," Mr Styles said.

"However, the recent pick up in new supply in the midlands and the north combined with higher mortgage interest rates should result in an easier tone to the house price picture by the end of the year."

But it is not all good news.

"There remains a risk that the London market is slow to adapt to higher interest rates as localised supply shortages continue to dominate a generally low housing turnover market," Mr Styles said.

"Setting appropriate interest rates against this backdrop will be difficult as several regional markets in the UK have experienced little or no house price growth in the last three months."

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