Nationwide stands alone as report shows prices still rising

Saturday 03 November 2007 21:00 EDT
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UK house prices rose by 1.1 per cent last month, according to the Nationwide building society. The surprise increase – flying in the face of other recent market surveys – takes the annual rate of house price inflation to close to 10 per cent, the society added.

Nationwide claims prices were robust in October because of an undersupply of properties for sale. "Different factors could be driving the low level of instructions, including a reluctance [among homeowners] to trade up and the fact that low unemployment is limiting the number of forced sales," said Fionnuala Earley, Nationwide's chief economist. "The overall result is that the stock of unsold homes is still relatively low, and this is providing some residual support to prices."

Elsewhere, however, there were renewed signs of a slowdown in the housing market. The Bank of England said the number of new mortgages approved fell from 108,000 in August to 102,000 in September. Meanwhile, the Royal Institution of Chartered Surveyors (Rics) again reported enquiries from new buyers down sharply.

Simon Rubinsohn, chief economist at Rics, said: "We still expect the pace of house price inflation to gradually slacken as the credit crunch restricts the availability of mortgage finance and the economy more generally slows."

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