House prices continue to rise
Published On 14 August 2007
House prices continued to increase in the 12 months to the end of June, despite the fact that increasing interest rates are making mortgages more expensive.Figures from the Department for Communities and Local Government (DCLG) show that the annual rate of house price growth increased to 12.1 per cent in the year to June - the biggest rise since March 2005.
The official data indicates that house price growth doubled in June - rising by 1.6 per cent in the month.
This means that the average home in the UK now costs £214,222 - compared to £210,793 in May.
"There is no denying that the DCLG house price data are markedly stronger than expected, and suggest that the housing market is proving resilient to higher interest rates," commented Howard Archer from Global Insight.
"The overall impression than we get from the very latest data and survey evidence is that the housing market has peaked and is gradually and erratically coming off the boil as demand is increasingly pressurised by the rising affordability pressures stemming from higher interest rates, modest real disposable income growth and elevated house prices."
Recently, officials from the Bank of England warned that interest rates could increase to six per cent before the end of the year - a move which would put further pressure on people with mortgages.
