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Housing market suffers from double Easter effect

Monday, 13 June 2005 12:00 AM

A double "Easter effect" caused house price inflation to fall sharply in April, new government figures show.

The Office of the Deputy Prime Minister revealed a 0.8 per cent fall in house prices during April, meaning prices were just 6.9 per cent higher than in April 2004.

This fall followed a 2.2 per cent rise in house prices during March, when house prices were 12.6 per cent higher than March 2004.

"There are always rises in house prices at Easter and with Easter earlier this year the inflation rate for March contained two Easter effects," the ODPM said.

Last year Easter fell in April, while this year it was a month earlier in March.

Last month's high house price inflation figure is explained by comparing a month that encompassed Easter (March 2005) with a month that did not (March 2004).

This month's lower house price inflation figure is similarly explained by comparing April 2004, which encompassed Easter, with April 2005.

Howard Archer, chief economist at Global Insight, said today's figure from the ODPM was more in line with that in surveys published by Nationwide and Halifax.

The ODPM survey is compiled differently from those produced by mortgage lenders, which use mortgage approvals to determine average house prices.

It uses data on completions supplied by mortgage lenders, and as such is always a month behind - Nationwide and Halifax having just published their surveys for May.

Mr Archer added: "We continue to believe that the housing market will avoid a sharp correction ... instead, we forecast that there will be an extended period of relatively subdued housing market activity and soft prices."

The average house price in the UK in April 2005 was £181,832 according to the ODPM.

The fall in property prices between March and April was largely attributed to the performance of detached house prices. These fell by 3.5 per cent month on month while the price of flats declined 0.4 per cent.

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