March marked the seventh month of stability in the once steaming, but now rather static UK property market as annual house price inflation on three major indicies fell back into single-digit territory.
Halifax, the country’s largest lender, on Tuesday reported a further slowdown in the annual rate of inflation to 9.7 per cent, the first reading below 10 per cent since November 2001.
Similarly, the FT House Price Index, which foreshadows data from the Land Registry, the most complete source of domestic housing information, fell from 10.2 per cent in February to 9.4 per cent in March.
Last week, Nationwide, Britain’s third-largest lender, had already reported a four-year low in the annual rate of change on its housing index as year-on-year inflation slowed to 7.9 per cent.
Month-on-month, Halifax said house prices increased 0.5 per cent between February and March, following a 0.5 per cent decline between January and February. However, monthly movements can be volatile.
Martin Ellis, Halifax’s chief economist, said: “The picture on a month-to-month basis remains mixed with four rises and four falls in the past eight months. Overall, there has been virtually no change in UK house prices since last September.”
However, he said there were signs that house buying activity might be picking up, pointing to stronger mortgage approvals in February. Halifax Estates Agents also reported an upturn in agreed sales since the start of the year.
The mortgage lender added that there had been a marked contrast in house price performance across the UK during the first quarter of 2005. The strongest price gains occurring outside England while prices fell in the South West, East Anglia and the North.
During the first quarter, Scottish house prices rose 6.1 per cent, prices in Northern Ireland increased 3.1 per cent and in Wales 2.4 per cen. Prices in the South West fell 1.2 per cent and in East Anglia 0.9 per cent.
However, prices in London increased by 0.1 per cent following two successive quarterly declines, suggesting that the market in the capital could be stabilising.
Over the past year, there has been a clear north/south divide with Northern Ireland, Scotland and northern England recording the biggest price increases while 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. The differential between the average price in the south and its equivalent in the north was £83,000 higher first quarter - £16,000 lower than two years ago.
