The government’s house price index out this week indicated an improvement for London where annual house price inflation rose by 0.2% to 1.8%. Elsewhere in England house price inflation fell.

The UK house price inflation rate fell from 6.0 per cent in May 2005 to 5.0 per cent in June 2005. Prices rose by 0.8 per cent between May and June, a smaller rise than the 1.8 per cent rise seen over the same period last year.

The rise in UK prices between May and June can be attributed to rises in prices in all dwelling types. In particular, prices rose for terraced houses, by 1.1 per cent, bungalows, by 1.6 per cent and other dwelling types by less than 1 per cent.

In the home countries, England and Wales saw a fall in annual inflation in June, while Scotland and Northern Ireland both saw a rise. The inflation rate in England fell from 5.3 per cent in May to 4.0 per cent in June; in Wales the inflation rate fell from 13.8 per cent to 10.8 per cent. Over the same period, in Scotland the rate rose from 11.8 per cent to 14.1 per cent; and in Northern Ireland the rise was from 9.3 per cent to 14.3 per cent.

The highest inflation rates were in the north in North West (9.9 per cent), North East (8.8 per cent) and Yorkshire and the Humber (8.4 per cent). Inflation rates in the East and West Midlands were 5.9 per cent and 5.5 per cent respectively. Inflation was below 4 per cent in the East, South West, and London and lowest in the South East, where inflation fell from 3.1 per cent in May to 1.7 per cent in June - due to a rise in prices between May and June this year of 0.5 per cent compared with a rise of 1.9 per cent in the same period last year.

House prices: regional

Mix-adjusted average house prices in May were £193,165 in England, £144,886 in Wales, £127,286 in Scotland and £126,795 in Northern Ireland.

The English region with the highest average house price in March remains London at £268,498. The lowest average price was in the North East at £132,684.

Only the East, London, South East and the South West had average prices above the UK average.

House price inflation: type of buyer

The UK house price inflation rate for first-time buyers fell from 7.7 per cent in May to 6.7 per cent in June. This was due to a small rise of 0.1 per cent in prices between May and June in the properties bought by first-time buyers, compared with a larger rise of 1.1 per cent seen over the same period last year.

The inflation rate for former owner-occupiers fell from 5.4 per cent in May to 4.4 per cent in June. This was due to a rise of 1.1 per cent in prices between May and June in the properties bought by former owner occupiers, compared with a larger rise of 2.1 per cent over the same period last year.

The average price paid by first-time buyers across the whole of the UK was £150,356 in June, while the average price paid by former owner-occupiers was £199,450.