Property inflation climbs

House price inflation in the UK rose in May at its fastest level since August 2003, according to official figures.

14:10 13 July 2004

House price inflation in the UK rose in May at its fastest level since August 2003, according to official figures.

The Office of the Deputy Prime Minister reported that house prices rose at an annual rate of 12.2 per cent in May, up from ten per cent in April.

The price of the average home rose from 168,600 to 170,719. Prices in London rose to 12.2 per cent above the same time last year, compared with 7.9 per cent in April and 4.9 per cent in March.

Wales was the top performing country with an annual house price increase of 27.5 per cent, followed by Scotland at 25.3 per cent, Northern Ireland at 13.8 per cent and England at 11 per cent. Prices were up 28.3 per cent in the North East of England and 22.5 per cent in the North West, compared to a modest 3.8 per cent rise in the South East.

The average cost of a home for first-time buyers rose in May by 20.7 per cent on the year before figure to stand at 138,273, up from 18.3 per cent in April.

Earlier surveys by lenders Halifax and Nationwide also suggested that rising interest rates failed to curb demand for property in May. However, more recent surveys have indicated that the UK housing market is starting to cool.

Halifax said prices increased by 1.2 per cent in June, the smallest gain since last November.