Residential property prices in the UK increased by 0.7% month-on-month in March and by 1.6% in the first quarter of 2010, according to the latest index.
Price rises in March have largely reversed a 0.8% fall in February and the average property is 9% higher than a year ago, the data from the Nationwide shows. It also reveals that stamp duty savings meant the typical first time buyer was £1,368 better off.
‘The last two months are consistent with a relatively flat profile for house prices and in line with the recent drops seen in buyer enquiries and house sales. Preliminary figures show that the number of loans taken out for house purchases failed to recover from January’s large dip, suggesting that weakness in house sales at the start of the year may have been due to more than just the snowy weather,’ explained Martin Gahbauer, Nationwide’s Chief Economist.
‘With greater than usual political and economic uncertainty ahead of the upcoming general election, potential homebuyers are proceeding cautiously. At the same time, the number of homes for sale has not increased appreciably, meaning that the impact of lower buyer activity on house prices has not been too negative. If this trend continues, we are likely to see relatively few properties changing hands, but with prices fairly stable,’ he added.
London saw the strongest growth in the first quarter of 2010 and remains the top performing UK region, the index also shows and annual price growth is now positive in all regions except Northern Ireland. In Greater London prices were up by a seasonally adjusted 2.5% in the quarter which resulted in a pick up in annual growth from 7.0% to 15.7%.
Outside of London, the East Midlands, Outer South East and South West saw the strongest quarterly performance, each registering a 2.3% rise in prices over the quarter. The Outer South East saw the strongest annual growth out of the three, with the annual rate of price change picking up from 5.5% in the fourth quarter of 2009 to 12.9%.
Continuing the trend seen in 2009, the northern regions generally saw weaker growth. The North West was the only English region where prices fell in the quarter, with a 0.4% decline. The North remained the weakest region on an annual basis, although the annual rate of change edged out of negative territory for the first time in two years, with prices up 2.3% on the first quarter of 2009.
Annual house price growth in Scotland picked up from 1.0% in the fourth quarter of 2009 to 5.6%, but remains below the UK average. Quarterly price growth in Wales was similar to the rest of the UK, with a 1.5% rise in the quarter. Average prices in Wales were up 10.6% year-on-year, reflecting a very weak first quarter in 2009.
Northern Ireland saw an improvement in the quarterly rate of change from -6.3% to -0.1%. On an annual basis, house prices were down 3.0%, a modest improvement from the 6.7% year-on-year fall in the fourth quarter of 2009. Northern Ireland remained the worst performing UK region.
The rise in house prices in March was not a surprise, according to Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors. ‘Although more supply has begun to come on to the market, it has yet to reach the level where it is matching demand,’ he explained.
‘Significantly the latest RICS Housing Market Survey still shows more agents seeing prices rather than prices declines. Meanwhile, the stamp duty announcement in the budget should provide a further boost for demand. As a result, we continue to believe that house prices will remain firm through much of the remainder of this year,’ he added.
