UK house prices rose by 1 per cent in September, but activity may have reached a plateau, Halifax said on Wednesday.

The stronger-than-expected figure confirms that homebuyers have yet to be deterred by August’s surprise rise in interest rates and the firm trend will not be lost on the Bank of England as it prepares to deliver its latest decision on the cost of borrowing on Thursday.

Bank of England governor Mervyn King has made it clear that he considers an over-exuberant housing market to have broader inflationary implications and has shown a willingness in the past to intervene to damp demand.

However, the Bank’s monetary policy committee is not expected to change interest rates this month, although economists believe a quarter point rise to 5 per cent is highly probable in November.

Halifax said the average house price in September was £181,186, up 1 per cent compared with the previous month. Prices had climbed by 1.3 per cent in August. However, after peaking this year at 9.1 per cent in May, the pace of annual house price inflation has fallen back, hitting 8 per cent in September.

Source:  Financial Times