Nationwide reports that house prices rose strongly in October, up by 1.1% over the month to an average of £186,044, but underlying market activity is clearly slowing. Although demand is weakening, existing homeowners appear in no rush to sell. However, new buy-to-let landlords will need a long investment horizon to realise good returns.
Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said: "House prices recorded a surprisingly strong increase of 1.1% in October, tying it with June for the highest month-on-month growth rate so far in 2007. The average price of a typical UK property was £186,044 in October, £16,421 more than the same month last year. The annual rate of price growth picked up from 9.0% in September to 9.7%, but this is still down from a peak of 11.1% in June and was partly driven by base effects. The rise in the annual rate temporarily breaks the slowing in price growth we have seen since June, but is unlikely to mark the start of a new upward trend. November and December saw particularly robust gains in 2006, and unless prices perform very strongly for the rest of this year, the annual rate of price growth will resume a downward path. The 3-month on 3-month rate of price growth - which helps smooth monthly volatility - edged up only modestly from 1.7% to 1.9%, which is still below the average of 2.2% seen so far in 2007."
