UK house prices increase by 1.6% in September

House prices increased by 2.8% in Quarter 3. This was the first quarterly rise for two years (2007 Quarter 3) and the biggest since 2007 Quarter 1 (2.9%).

The UK average house price in September was 1.7% (£2672) higher than at the end of 2008. Prices have risen by 5.9% since reaching a trough in April 2009; an increase in the average price of just over £9000. The national average price is currently at a similar level to that in mid 2005.

House prices in September were 7.4% lower on an annual basis. The annual rate of change (measured by the average for the latest three months against the same period a year earlier) has fallen markedly from a low of -17.7% in April. It is at its lowest since June 2008 (-6.1%).

Commenting on the figures, Martin Ellis, housing economist, said: "The combination of increased demand and a low level of properties available for sale has pushed up house prices in recent months.

"The marked improvement in affordability due to the reduction in both property prices and interest rates since mid 2007 has been a key factor in stimulating higher demand.

"Continuing increases in unemployment and low earnings growth are likely to constrain the rise in demand.

"There are also some signs that the improvement in market conditions is encouraging more people to put their properties up for sale. This development could loosen market conditions by alleviating the current shortage of supply and curb the pace of house price growth evident in recent months."

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