A decline in house price inflation

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by Kay Murchie

The Department of Communities and Local Government (DCLG) has proof that house price inflation is falling and a cooling property market is emerging.

In August, prices across the country increased by 0.5% taking the average house price in the UK to £219,528. However, the annual inflation rate for property dropped from 12.4% to 11.4%.

The DCLG report repeats information of other surveys from lenders and surveyors, which have indicated a recent downturn in the property market. The fall in inflation highlights that the market is responding to the 5 interest rate hikes since August 2006.

The DCLG commented that it is likely that property prices will decline further throughout the remainder of 2007 as the amount of people taking out new mortgages declines and a rise in mortgage application rejections increases.