The property market has shown marked signs of inflation since July 2004, with an annual rise of house price at 4.4 percent. The average house price rocketed from 1.4 percent to 158,478 pounds, since last May. Fionnuala Earley, group economist at Nationwide said,
This is the strongest monthly rate of growth since July 2004 when it was 1.9 percent and the annual rate of house price inflation was more than 20 percent.
Though the inflation is modest this January, yet the pick-up had been nippy enough, with 4.4 percent every year, signaling this increase to accelerate in the future. The comparative rate analysis on house mortgages by Bank of England and British Bankers’ Association shows that the former, which had kept the interest rates at 4.5 last August is going to raise it after its last rate meetings, taking into account the inflation in the house prices, and the latter notes the a 28 percent increase in mortgage approvals.
As per forecasts this trend is going to fall, due to unemployment and reluctance of consumers to pile up debt. Though the lenders are happy with an expected rise of house prices from 0 to 3 percent in 2006, an assumption that the rate of economic growth will tend to be slow in the long-run, this inflation might not support the market.
