RICS pleased by Land Registry findings
Figures released by the Land Registry for quarter four 2005 showed an increase in house price inflation on the previous year by 4.6 per cent.
Quarter three had an increase of 3.5 per cent and a rise in the number of high value home sales helped raise the average price of property sold at the end of last year. Quarter four 2004 house price inflation on the Land Registry measure was up 11.8 per cent on quarter four 2003.
This slight increase seen in the final quarter of last year is not surprising as the RICS housing market survey, as well as house price data from mortgage lenders detected a strong market months ago. The Land Registry figures lag behind these other measures because they are based upon completion prices, which are recorded several months after sales have been agreed. While these figures show a slight fall in prices in quarter four, the market did actually perform well during a period of the year that is know for being seasonally weak.
Northern regions in England performed best with annual price rises accelerating in the fourth quarter ensuring continued out performance in relation to regions in the south.
The large pick-up in activity seen in mortgage approvals has now fed through to completed transactions. Completed transactions rose by 12.6 per cent in quarter four from levels a year ago, compared to the drop seen in quarter three (down 15.4 per cent against quarter three 2004). Again this was not surprising, as the number of mortgage approvals has doubled in the past 12 months and buyer enquiries have been rising according to the RICS housing survey for seven months.
In regional terms, the South West saw the largest rise in transaction volumes, 20.5 per cent more properties sold in the fourth quarter of 2005 than a year earlier. The North West saw the smallest rise with transaction levels only 2.8 per cent higher than the same period in 2004.
RICS expects the upturn in housing activity to be sustained, supported by a recovery in economic growth and a possible interest rate cut in the coming months. However, a continued weakening in the labour market in the coming quarters would begin to undermine high activity levels especially if a resurgent oil price and other factors limit the room of the Bank of England to cut interest rates in response.