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House prices stalling

House prices stalling

Tuesday, 5 April 2005 12:00 AM

Property values in March 2005 are almost identical to those in September 2004, according to figures published by Halifax.

The latest Halifax House Price Index suggests that with four months of prices rises and four months of price falls in the last eight months, house prices have effectively stalled.

This data concurs with figures released last week by Nationwide Building Society, which show house prices have risen just £145 over the same period.

However, while Nationwide saw a 0.6 per cent decline in March, Halifax found a 0.5 per cent increase. These opposite readings counteract a similar disagreement in February, where Nationwide found a 0.5 per cent increase and Halifax a 0.5 per cent fall.

Both mortgage lenders, however, agree that March is the first month that annual house price inflation dropped below ten per cent for the first time since 2001.

The average house now costs £163,714, Halifax found.

"The picture on a month-to-month basis remains mixed with four rises and four falls in the past eight months. Overall, however, there has been virtually no change in UK house prices since last September," said Martin Ellis, Halifax chief economist.

However consumers should not be worried, Halifax adds.

"The ongoing good health of the UK economy and the associated strength of the labour market, together with historically low interest rates and a shortage of housing supply, however, appear to be limiting the extent of the downturn. There are increasing signs that activity levels are now stabilising and house prices are broadly static at a national level," Mr Ellis explained.

But while house prices overall have stalled, there are large differences in the performance in the regions. Prices in the first three months of the year fell in the South West, East Anglia, and the North while the largest rises took place in Wales, Scotland, and Northern Ireland.

"Over the past year, there has been a clear north/south divide with Northern Ireland, Scotland, and northern England recording the biggest price increases whilst Greater London, the South East, and the South West have experienced the smallest gains. This pattern has caused the differential between the average price in the south and the north to narrow further," Mr Ellis explained.

Halifax found that the difference in average house prices between the northern and southern regions has now been cut to £83,000 - down from £99,000 two years ago.

But 2005 has seen a slight recovery in the London market, with prices rising 0.1 per cent in the first three months of the year - following six months of decline. Put together this means prices in London have risen just one per cent in the last 12 months.

By contrast property values in Northern Ireland have risen 25 per cent over the last year, while house prices in Scotland rose 23 per cent.

In England, Yorkshire and the Humber rose 16 per cent, the North West was up 15 per cent, and prices in the North rose 14 per cent. After London, home values in the South East (five per cent) and the South West (six per cent) rose most slowly.