Over the past two months, annual residential property price growth has fallen sharply, according to Chesterton…

The price of an average residential property in England and Wales is now £198,422, according to Chesterton.  Prices have risen +9.4% since September 2006, compared to+10.6% in July 2007.

Property price inflation is likely to recede well below the 10% mark over the next few months. The factors that have put downwards pressure on house price growth are:

• Rise in interest rates throughout 2006 and 2007.
  
  
• Introduction of Home Improvement Packs –which distorted the number of houses on the market.
  
  
• Increase in lending standards.
  
  
• Rise in the cost of credit.
  
  
• Reductions in bonus payouts.
  
  
• Fall in consumer confidence.

Annual average property prices in the top 20% of the housing market grew by +14.7%, while the bottom 20% of the ladder only grew by +6.8%. The recent credit squeeze will affect first time buyers more than other homebuyers as they are riskier borrowers

Prices in Scotland and Northern Ireland continue to grow at a rapid speed, conflicting with English house price data. Prices in Northern Ireland rose +1.6% in September 2007, up 48.8% annually. Prices in Scotland rose +1.3% in September, an annual rise of +17.7%

House price growth in London was +0.8% and annual price growth has fallen to 15.9% from a high of +17.2% in July

Annual inflation falls

The annual inflation of a detached house has fallen from +7.2% at the end of the second quarter of 2007 to +6.2% at the end of the third quarter. Previously, only houses with four bedrooms or more were subjected to needing a Home Information Pack (HIP). This pushed many larger homes onto the market before the law was implemented suppressing price growth

The price of a property owned by the average senior official or manager rose +7.5% between September 2006 and 2007. The average price of a property owned by an unskilled manual worker has risen +7.6% since September 2006

Annual residential property price inflation in Kensington and Chelsea slipped slightly to +28.3% from 31.2% in August.  Prices in Rhondda Cynon Taff and Blaenau Gwent fell in September, by -0.4% and -0.6% respectively