House prices go up in March

Nia Williams

April 8, 2010

Prices in the first three months of 2010 were 0.6% higher than in the final quarter of 2009. This compared with a 3.6% rise between the third and fourth quarters of 2009.

House prices in March were 5.2% higher on an annual basis. This was the largest increase in the annual rate of change – measured by the average for the latest three months against the same period a year earlier – since December 2007 (also 5.2%).

Prices are 9.1% above their trough in April 2009; an increase in the average price of £14,031 over this period. This follows a decline of 23% between August 2007 and April 2009. The average house price is now £168,521.

Housing market activity has improved, according to Halifax. Property sales in England and Wales have increased for three consecutive quarters after reaching a low in 2009 Q1. Indeed, sales in the second half of 2009 were one third higher than in the second half of 2008. Despite this recovery, however, sales are still around only half the level in the second half of 2007. In addition, Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase – a leading indicator of completed house sales – fell by a seasonally adjusted 2% between January and February following a much larger decline of 17% in the previous month. (Sources: HMRC and Bank of England).

Commenting, Martin Ellis, housing economist, said: “House prices increased by 1.1% in March, partly offsetting February’s 1.6% fall. This was the eighth rise in the past nine months, taking the average price to 9.1% above the low point reached last April.

“Prices in the first three months of 2010 were 0.6% higher than in the final quarter of 2009. This was smaller than the 3.6% rise between the third and fourth quarters of 2009, suggesting a slowdown in the trend rate of house price growth. The return of the lowest stamp duty threshold to £125,000 affected housing demand at the end of 2009 and in early 2010. The bad weather in the first two months of this year also had an impact on demand at the start of this year.

“There are signs that an increase in the number of properties available for sale is beginning to reduce the imbalance between supply and demand. This should help to contain the upward pressure on house prices.”

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