UK housing market powers up

Indicators show that the UK property market is powering up again, despite the recent interest rate rise.

The Department for Communities and Local Government (DCLG) (formerly known as the Office for the Deputy Prime Minister - ODPM) announced this week that house prices across the UK have risen 6% to July, with the average house price now £194,454.

And this month the Nationwide and Halifax both reported that the housing market continues to develop strength in spite of the recent Bank of England interest rate rise.

This stands against a housing market that a year ago was seeing a controlled fall and a generally weakening property market.

This lead to speculation that the trend would continue into 2006 with only low-digit house-price inflation overall, with the property market stagnating in the second half of the year.

Instead, what we’re seeing is a gradual resurgence of the UK property market throughout the year.

And London - traditionally the trailblazer in property prices, is experiencing a boom that could see growth in the capital rise to double-digits towards the end of the year - a growth that traditionally ripples out across the UK.

However, the UK property market remains vulnerable - there are already signs that we could be entering an economic downturn.

Additionally, there are renewered concerns about the state of the US economy, which is seeing a slide in their property market, along with rising unemployment - all against a backgrop of heavy debt.

Any adverse economic conditions in the USA are likely to spread out globally, but it remains to be seen if even this threat will be enough to dampen the UK’s property market, which has otherwise prospered against all expectation.