The London housing market continues to display considerable vigour but price rises in much of the country are more subdued, the latest FT house price index shows.
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FT index map and historical data charting the changes in regional house prices.
Video: Jamie Chisholm, economics reporter, on the slowing UK house price market.
Signs that house price inflation may be slowing across large parts of the country will be welcome news for those hoping to place a foot on the property ladder.
The difficulties faced by many in trying to buy their first home is further illustrated in a report released by the Halifax on Friday, which shows 70 per cent of towns are unaffordable for key public sector workers.
The average price of a house hit £217,076 in March, up 0.7 per cent on the previous month, according to the FT house price index.
This leaves annual house price inflation at 8.1 per cent, a touch higher than the 8 per cent recorded in February.
Peter Williams, chairman of Acadametrics, the consultancy that compiles the FTHPI, said the data suggested that nationally, house price increases had started to flatten out.
“With the effects of past interest rate increases still working their way through the market and with the continuing threat of further interest rate increases, we expect to see the market remaining moderately subdued,“ he said.
Mr Williams also noted the national figures were still being slightly skewed by the buoyant London housing market.
“London continues to have a large impact on the national figures but it is a market driven by a wider range of factors than elsewhere. Excluding London, our annual increase would be 6.9%, rather than 8.1%.”
“In fact, price increases in some regions are now quite muted and, on a monthly basis, are showing little change,” he added.
In March, prices in London were 12.2 per cent higher than a year earlier, with the next biggest increase, 8.5 per cent, seen in East Anglia and the South West.
Worst performing region was the West Midlands, where prices rose by 4.7 per cent over the period.
A cooling of the market is necessary to help many public sector workers such as teachers and police constables to buy a home, new research from the Halifax shows.
The lender found that key workers were unable to afford a property in 363 towns out of 517 across Britain. This means property is too expensive in 70 per cent of towns, a marked deterioration in affordability from 5 years ago when only 36 per cent of towns were off limits.
Nurses and firefighters face the greatest difficulties. The Halifax says that the average house price in 99 per cent of towns was too rich for the typical nurse, while 97 per cent were too expensive for firefighters.
Tim Crawford, group economist at Halifax, said: “Housing affordability continues to deteriorate for key workers across Great Britain and it is now clearly not a problem confined to the south of England.
“The government’s key worker schemes are providing some relief but given recent trends there would clearly be benefits from broadening their reach.”
The FT house price index is based on Land Registry data covering every transaction in England and Wales and is more comprehensive than the surveys by Nationwide and Halifax.
The lenders recorded increases for the year to March of 9.3 per cent and 11.1 per cent, respectively.
