FT: House prices flat in March

Friday, 11, Apr 2008 10:31

Property prices in England and Wales remained static during March, according to the latest house price survey from the Financial Times (FT).

The findings follow a three-month run of growth rates hovering around zero - followed by a 0.5 per cent fillip in February.

In contrast Halifax found prices had slipped by 2.5 per cent during March earlier this week.

The FT research finds annual growth has now slipped to 5.4 per cent, down from the 6.1 per cent recorded in February - adding further evidence to a widespread house price crash.

However, London continues to be out of step with the rest of England and Wales, with an annual growth rate of 12.3 per cent, when averaged over the last three months.

This is some five per cent higher than the next highest region, the south-east, which recorded growth of 7.2 per cent over the last year.

Without the London figure, annual growth in England and Wales would have slipped to a lowly 3.8 per cent.

The south-west and Yorkshire & the Humber also performed ahead of the field, recording growth of 5.1 and 4.6 per cent respectively.

Yet, annual growth had fallen to just 1.5 per cent in the West Midlands and 1.8 per cent in Wales, according to the FT.

"At present, there is nothing to suggest this downward trend won't continue in the short term even though the fundamentals of demand and supply, employment and interest rates remain very favourable," explained Dr Peter Williams, chairman of Acadametrics, which carried out the research on behalf of the FT.

"London, the south-east and the south-west have now recorded seven monthly falls in the annual rate of price inflation - together they make up over 40 per cent of the market - giving significant momentum to this price adjustment."

The slowdown has been caused by the now infamous credit crunch.

"With continued problems of liquidity and funding and these feeding through into the reduced availability and higher price of mortgage products, affordability is being squeezed despite static prices, and transaction numbers are continuing to fall," continued Mr Williams.

The Bank of England yesterday cut interest rates for the third time in five months, bringing the base rate down to five per cent.

However, much may depend on the future decisions of the monetary policy committee (MPC).

"The next few months will be critical in terms of likely outcomes with much turning on the part played by the Bank of England," concluded Mr Williams.