House prices up 5.4% last quarter

House prices in England and Wales have risen just 5.43% in the second quarter of 2005, the lowest annual rate since 1996, official figures revealed today.

The average house price now stands at £184,924 after the rise, according to the Land Registry. The same period last year saw an increase of three times that figure, at 17%, to an average price of £175,401.

Inflation is slowest in the south-west, where house prices rose just 4.27%, while Wales saw the best performance, recording a rise of 10.37%. The north-west and East Anglia both recorded rises of over 7%, while the East and West Midlands recorded an increase above 5%.

Sales in England and Wales are down, showing a fall of 27.7%, from 299,986 in 2004 to 216,890 for the same period in 2005.

Sales of properties over the £1m mark were down from 977 in the second quarter of 2004 to 718 between April and June 2005.

The Land Registry provides an official overview of the property market, and unlike other indices includes both cash and mortgage house purchases. But as it records completed sales the figures tend to be less up to date than some other surveys.

Some more recent statistics released today provided a slightly better outlook for homeowners.

The Royal Institute of Chartered Surveyors said this morning that June's new-purchase enquiries from would-be buyers showed the strongest increase in 18 months. This is thought to be partly due to fading fears over further interest rate rises.

Rics reported it "expects a modest upturn in housing activity to continue, but a cooling economic climate means interest rate cuts will not spark a renewed housing market boom".

Property website Propertyfinder.com has also predicted a return to brisker trading in the housing market in the autumn. Jim Buckle, the firm's managing director, said a pick-up was expected after three months' sustained confidence.

"Now interest rates have been cut and with a further cut expected in the autumn, the market can steadily pull out of the doldrums. We expect transactions to strengthen into the autumn after a normal seasonal summer lull," he said.

Howard Archer, economist at consultancy Global Insight agreed there seemed to be an upturn in buyer activity.

He said: "Mortgage loans and approvals have seen modest overall improvement in recent months as have the number of completed sales, while there are currently reports from estate agents that buyer enquiries have picked up to a limited extent lately.

"Some surveys also indicate that sellers are beginning to become more realistic in their pricing which will support levels of housing market activity."

Mr Archer said it was unlikely that sellers would drop the price of their homes dramatically and predicted house prices would remain "relatively soft for an extended period".