House prices rose by 1.7% in October but inflation may slow in the coming months, according to the latest Halifax house price index.
Martin Ellis, chief economist at Halifax, today says although house prices rose by 1.7% in October, there have been indications of a weakening in activity at earlier stages of the house-buying process, suggesting inflation may soon begin to slow.
He states: “Significantly higher utility bills and the increase in mortgage rates over recent months – both in fixed and variable rate products – are expected to constrain housing demand, causing the annual rate of house price inflation to ease over the coming months.”
Following signs of a levelling off in activity in June to August, the number of loans approved for housing purchase increased by 5% in September to 126,000 from 120,000 in August.
But the latest survey by the Royal Institute of Chartered Surveyors (RICS) revealed completed sales were broadly flat over the past six months with virtually no change in sales between quarter one and quarter two.
In addition, growth in new buyer enquiries slowed sharply in September, indicating a possible weakening in demand.
The House Builders’ Federation has also reported an annual fall in the numbers looking at new homes for the third time in four months, suggesting a weakening in demand at the early stage of the house-buying process.
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