THE average house price edged closer to the é200,000 mark in September. Figures from the Department for Communities and Local Government showed that the average price of a typical property rose to é198,552.

The average was up 0.8 per cent on the previous month's é197,009, and puts the annual rate of house-price inflation at 8 per cent.

The pace of inflation in England, Scotland and Wales increased during September.

Northern Ireland saw a slight fall in the annual rate of increase, although with house prices up 23.6 per cent on September 2005, it was still well above the average.

London remained the most expensive region, with the average house price reaching é289,901 in September, according to the statistics.

The lowest average price was recorded in the North East at é142,208.

House-price inflation for first-time buyers jumped to 7.7 per cent in September, up from 6.8 per cent in August.

It put the average price for first- time buyers at é152,633, while the typical price paid by someone who already owns a house was recorded at é218,139.

Momentum

Commenting on the figures, Howard Archer, chief UK and European economist at Global Insight, said that it showed that house prices continued to have upward momentum.

But he added that, going forward, the property market could see a dampening in activity and prices.

He said: "The further rise in mortgage payments following last week's interest rate hike, and markedly rising house prices will add to affordability problems and seem very likely to increasingly squeeze buyers out of the market.

"Significantly, first-time buyers are finding it ever more difficult and costly to break into the housing market.

"There are also increasing reports that people are finding it more difficult to trade up the housing ladder. Meanwhile, a growing number of people have missed mortgage payments recently."

Speaking at a visit to new shared-ownership family housing in Morecambe housing minister Yvette Cooper said: "First-time buyers can face real pressures getting their first step on the housing ladder. That's why we are developing more shared ownership homes to give them a helping hand.

"But to address long-term house price pressures, the Barker Report made clear we need to build more homes.

"That is why the plans by local authorities to build more and better homes are so important, as well as changes to the planning system to bring forward more land."

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