House prices rose by another 0.8% in May to take the annual house price inflation figure to 7.7%, acc...
The average UK house price is now £87,267 and figures also released by Nationwide show that prices have increased 50% since Labour came to power four years ago. The average house price in 1997 was £58,196.
Nationwide's group economist Alex Bannister says the figure compares with a 0.3% decrease in May of last year, putting the 7.7% annual house inflation ahead of the 6.6% house price rate of last year, and in line with Nationwide's expectations.
"Accompanying this buoyancy, the number of mortgages approved for house purchases was 20% higher in the first quarter of the year, when compared to the first quarter of 2000. This will feed through to higher house sales in the next few months.
"Although the economy is set to slow, we expect the recent pace of annual growth to be maintained. With incomes rising and interest rates falling we remain confident in our forecast of a 7% rise in prices this year."
Despite a slowdown in the UK economy triggered by the US slowdown, house prices continue to climb three times as fast as the inflation (2.5%) albeit at a slower rate than in London. The house price income ratio (the number of years of annual income need to buy a house) for London is five and 3.7 outside the capital.
The increase in property value during the Labour administration is the biggest percentage gain since the Conservative government of 1983-7 when house prices rose by 57%. That figure fell to 21% and 12% respectively during the Conservatives third and fourth terms of office.
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