House prices up but no boom on horizon

The average UK house price was £158,478 in January, up from £151,757 the same time last year. The market has strengthened since October 2005, reflecting more buyer confidence since the 0.25 per cent base rate cut in August to 4.50, says the Nationwide.

The number of mortgage approvals rose to 115,000 in November up from 75,000 the same time last year. Nationwide also says it expects more house price growth in the middle of 2006, because “a rise in mortgage approvals tends to be reflected in higher house price inflation around 7 months later.”

The slowdown has shifted the balance of power back towards sellers from a buyer’s market for the last year and a half, says Chartered Surveyors RICS. But unemployment levels are still edging up and affordability is so stretched home buyers are unable to absorb another house price boom.