House prices are continuing their steady rise, with Nationwide's Monthly House Price Index climbing ...
House prices are continuing their steady rise, with Nationwide's Monthly House Price Index climbing by 1.1% in August.
This means house prices have now increased twice as fast as gold over the past three years. The rate of increase, though, has slowed from the 2%-3% per month seen in the spring and summer of last year.
The average house price in the UK is now £129,258, representing an 8.9% rise since the beginning of 2003.
Activity levels have also increased, according to the report, with 132,000 property sales completed in July, compared with 103,000 in June.
Alex Bannister, group economist at Nationwide, said the firm is revising up its forecast for growth during 2003 to 13%.
He also predicts interest rates may rise. 'Just over a month ago, financial markets were expecting the Monetary Policy Committee to keep rates on hold for at least the next 12 months,' he said. 'Following the release of more positive US economic data, expectations have altered dramatically and markets are now pricing in a 1% point rise by September 2004.'
In Bannister's view, a slowdown in house price growth is likely, given the cyclical nature of the housing market and high debt levels.
'We estimate the real trend growth rate of house prices has been around 2% a year over the past 50 years,' he added.
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