Annual house price inflation hits highest level since April 2005

House prices soared nearly 1% in July pushing the annual increase to nearly 6%.

Statistics released by the Nationwide Building Society show that house prices rose 0.8% last month. This meant the annual increase in prices rose from 5.0% to 5.9%, the strongest rate of increase since April 2005.

The increase in house prices has reportedly risen above wage growth rates, which stood at 4.1% in May. But this upturn in the market has only occurred in London and the South East, with other regions experiencing slower growth and even flat prices.

Mortgage approvals have also increased. Some 120,000 mortgages were approved in June, well above the average of 108,000, suggesting that house prices will remain stable into the second half of 2006.

Sales activity and new purchase enquiries are on the up all over the country, and not just in the south.