House price rises slowed to 0.6% in September, says Hometrack

UK house prices rose by a slightly slower rate in September indicating that the housing boom may be starting to run out of steam.

Prices rose by an average of 0.6 per cent in the month, a significant slowdown from May's peak of 2.6 per cent, according to a survey by the property consultants Hometrack.

John Wriglesworth, Hometrack's housing economist, said: "Record low mortgage rates, rising incomes and restricted supply point to more house price rises to come, albeit at a more modest rate. We are now predicting 16 per cent price rises for this year and 8 per cent in 2003 – still a booming market."

The biggest regional rises showed the ripple effect from the London market. Top of the list were Teesside, Cornwall and Northumberland.

The findings contrast with those of property website Rightmove.co.uk which on Monday reported that UK house prices jumped 2.3 per cent in September. Mr Wriglesworth's public relations consultancy also represents Rightmove but he denied any contradiction. Rightmove claims to use a bigger sample and bases its results on the asking prices of homes whereas Hometrack monitors the eventual selling price.

Asked to explain the differences, he said: "It's a difficult one. We monitor 4,000 estate agents and they are all saying the market is slowing down." He said a 2.2 per cent fall in the number of buyers compared with a 2 per cent rise in the supply of homes registered for sale was a key factor.

Hometrack's survey showed moderating rises in London with prices in September up 0.5 per cent from August. The study marks varying performances from different boroughs. Strong rises were recorded in Barking & Dagenham, Hillingdon, Hackney and Newham. But falls were recorded in Camden and Kensington and Chelsea.

The average price in London is now £233,700, well above the national average of £134,000.