The average UK house price rose to a new record high of £270,000 in September, £28,000 higher than the same time last year. Average house prices increased over the year by 11.5% in England, 15.4% in Wales, 12.3% in Scotland, and 10.9% in Northern Ireland. The North West was the region with the highest annual house price growth, with average prices increasing by 16.8% in the year to September, up from 11.6% in August. The lowest annual growth was in London, where average prices increased by 2.8%, down from 6.7% in August. This represents the lowest annual growth in London since July 2020.
On the back of house inflation, inflation soars to 10-year high of 4.2% in October CPI increased by 1.1% over the month, compared with no change in October 2020. CPIH inflation, which includes owner occupiers’ housing costs, rose by 3.8% in the 12 months to October, up from 2.9% in September. The largest upward contribution to the CPIH inflation rate came from housing and household services, with further large upward contributions from transport, restaurants and hotels.
Following the relatively healthy labour data out on inflation release will increase the pressure on the Bank of England to finally raise interest rates. The BOE will be aware that when it failed to raise interest rates at its 4 November meeting it weakened sterling and created another source of inflation through higher import prices. The BOE may be reluctant to make the same mistake again when the Monetary Policy Committee meets next on 16 December.