House prices climbed by 1.1% in March and 4.4% in the first quarter, according to the Halifax House ...
House prices climbed by 1.1% in March and 4.4% in the first quarter, according to the Halifax House Price Index which suggests property values are not rising as fast as last year.
Part of the reason properties are not rising as quickly in value is more properties are coming onto the market, says Halifax, which is now predicting property inflation will end at around 9% this year, compared with 26% last year.
Average value of a home is £127,040, but London's status at the height of the property boom appears to be drifting downwards, as regional figures suggest the largest quarterly price rises were seen in the North(8.1%), East Anglia 7.4% and Wales (6.2%), whereas London now sits ninth in the house price inflation table, out of 12 regions, with a quarterly increase of 2.7%.
On an annual basis, the East Midlands is experiencing the biggest increase in house prices, says Halifax, as properties are expected to rise 34% this year, followed by 31% in the North and 28% in Yorkshire and the Humber, says Martin Ellis, chief economist at Halifax.
"Overall, we expect annual house price inflation to slow from 26% at the end of 2002 to 9% at the end of 2003 with rises of 12-15% in northern England and Scotland compared to 2-3% in London and the South East.
"Prices rose by 4.4% in the first three months of 2003. While this is equivalent to a still strong annualised rate of 19%, it is slower than the pace of house price growth recorded in 2002 when prices rose by 26%."
Ellis continues: "While affordability remains very good with mortgage payments representing an historically small percentage of a new purchaser's income, borrowers are constrained in the amount they can borrow by their income. The much sharper rise in house prices compared to average earnings in the recent past is reducing the pool of buyers, particularly potential first-time purchasers, that can raise a sufficiently large mortgage to purchase at current prices. Evidence that this constraint is beginning to bite was provided by a fall in the proportion of mortgage lending accounted for by first-time buyers to below 30% of all loans to home purchasers for the first time in February.
"We expect the difficulties that first-time buyers face in entering the market, particularly in the south of England, to increasingly curb demand and cause house price inflation to moderate gradually during the rest of 2003," he adds.
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