September House Price Rise Highest in Four Years

Fri, 13 Oct 2006

September house prices increased at their fastest rate for four years, so says new researh from RICs (Royal Institution of Chartered Surveyors).

In September 45% more surveyors reported increasing house prices than decreasing ones, up from 35% in August.

Greater economic activity has ensured that house prices increase across the country. Property stock is low and buyer enquiries are high, so sellers remain in a strong position to benefit .

Estate agents report that house price rises are presently being driven by potential buyers coming back to the property market in tandem with limited property availability .

London as well as the south east are leading in terms of the price rises. Estate agents report that ‘gazumping’ is back with London house prices rising at the fastest rate since January 2000.

Gazumping happens when one seller accepts an offer, yet prior to contracts being exchanged another buyer places a second, higher, offer that the seller accepts instead.

Rises in house prices in London and the south-east are now spreading with house prices in the north-west and East Anglia becoming increasingly higher. Yorkshire, Wales and Humberside have also experienced high house price rises.

Yet such rising prices can actually harm the property market.

Ongoing rising house prices can make it difficult for the Bank of England to keep the base interest rate level at 4.75%, other than if the economy shows unexpected weakness.

Low affordability of housing as well as high interest rates would place a greater burden on the housing market.

Rics forecasts a slowdown in the market should interest rates rise, not a crash.

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