House price inflation slows down

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House price inflation in England and Wales slowed down in July, according to the Land Registry.

Its survey of all completed property sales showed that prices rose by just 0.1%, dragging the annual inflation rate down from 9.1% to 8.8%.

This meant that the average property value in England and Wales has now risen to £181,460.

Prices are rising fastest in the London area, where they are currently 15.5% higher than in July last year.

Rate impact

After taking off again at the start of 2006, these latest figures suggest the property market is now responding to the higher cost of borrowing brought about by the Bank of England's five increases in interest rates since August 2006.

Earlier this month the Royal Institution of Chartered Surveyors (RICS) said the number of first-time house buyers was falling at its fastest rate in more than three years.

AREAS WITH AVERAGE PRICES UNDER £100,000 Blaenau Gwent, Blackburn, Kingston-upon-Hull, Merthyr Tydfil, Rhondda and StokeSource: Land Registry

The Land Registry figures also show that there has been a fall in the number of properties being sold.

In May, the latest month for which transaction figures are available, there were 9% fewer properties sold than in the same month last year.

Falling sales volumes were concentrated in properties worth less than £200,000.

More expensive properties were still selling in greater numbers, with 566 homes in England and Wales bought for more than £1m each during May, just over half of them in London.

Regional variations

The Land Registry said price inflation in the capital and in the rest of south east England was continuing to heavily influence the wider picture.

"For the fourth month in a row the rate of increase for London house prices remains approximately 6% per annum greater than that of England and Wales as a whole," it said.

The average house price in London has now reached £342,936.

Price growth in London is far outstripping the rest of the country

In three boroughs - Camden, Westminster, and Kensington and Chelsea - the average price is more than £500,000.

On present trends it will soon be impossible to buy a property of any sort in London for less than £100,000. There were only 74 such sales in May.

At the other end of the scale, there are only six areas where the average price is still less than £100,000: Blaenau Gwent, Blackburn, Kingston-upon-Hull, Merthyr Tydfil, Rhondda and Stoke.

The region in which prices are rising most slowly is the West Midlands, where they are currently going up at 4.5% a year.

Across England and Wales, the types of property experiencing the fastest price increases have been flats and maisonettes, up by 9.7% to an average of £171,000 in the year to July.