UK house price inflation rises to 9.5%

Annual house price inflation rose to 9.5 per cent during the first quarter of 2007, according to the Nationwide Building Society. The price of a typical house now stands at £175,554.

Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said: Prices increased in every part of the UK in the last 12 months, but the rate at which they rose was quite different across the country. Northern Ireland and London stand out as the leaders with the fastest annual rates of house price growth in the UK. In contrast, the Northern and North West regions and Wales saw the biggest slowdown in the annual rate of house price growth.

Overall, the annual rate of house price growth in the UK is firm, but the quarterly data suggest that the underlying rate of growth is now starting to cool. During the first three months of the year the rate of house price inflation slowed from 3.3% to 2.2%. However, London and Northern Ireland bucked this softening trend with house prices increasing by 4.4% and 14.6% respectively during the first quarter.

In England, the North-South gap opened up further over the year as prices in the South of England grew at more than twice the rate of those in the North . Prices in the South increased by 10.7% compared with only 5.3% in the North, reversing the pattern seen two years ago. Within England, London saw the fastest pace of annual growth at 14.3% and the North West the slowest at 4.5%. London was the only part of England to see house prices accelerate in the first quarter. The Northern region was the only region to see a fall in house prices. During the first quarter prices fell by 0.4%, although this is likely to be correcting the 4.8% growth seen in the final quarter of 2006.

Northern Ireland made housing market history in the first quarter of 2007 with the fastest annual rate of growth anywhere in the UK since Nationwide records began in 1973. Prices increased by a staggering 57.6% in the last 12 months. This brings the average house price in Northern Ireland to over £200,000, a figure comparable with prices in the Outer South East. Prices in the Province are still accelerating too, increasing by 14.6% during the first quarter, faster than anywhere else in the UK.

London was the only part of England where house price inflation picked up during the first three months of the year. Prices increased by 4.4% during the quarter, bringing the annual rate of growth up to 14.3%. This is the fastest annual rate of growth in the capital for almost four years.

Scotland maintained its strong performance in the first quarter but the rate of growth is showing signs of cooling. Prices increased by 15.2%, the second fastest rate of growth in the UK, and the fourth consecutive quarter of double-digit growth. However, the rate of growth during the quarter cooled sharply to 2.7% down from 3.7% in the last quarter of 2006. Despite the robust growth over the last year, Scotland is still the second cheapest place in the UK with a typical house price of £140,929.

The Welsh housing market also cooled rapidly in the first quarter. House prices are a firm 6.1% higher than this time last year, but during the quarter prices increased by only 0.8% compared with 2.5% in the final quarter of 2006. A typical property in Wales is now worth just over £150,000, more than £8,500 higher than at this time last year.