Key points
-House prices increased by 0.5% in March, offsetting February's 0.5% fall. Overall, there has been virtually no change in UK house prices since September 2004.
-The annual rate of house price inflation continues to slow, dropping below 10% in March for the first time since November 2001, to 9.7%.
-Regionally, the strongest house price gains in the first quarter of 2005 were outside England. The biggest price gains during the quarter were in Scotland (6.1%), Northern Ireland (3.1%) and Wales (2.4%). Prices fell in the first quarter in the South West (-1.2%), East Anglia (-0.9%) and the North (-0.6%).
-The average price in Scotland (£105,397) broke through the £100,000 barrier for the first time in 2005 Quarter 1. Scotland is the last part of the UK to reach this landmark.
-Prices in London increased by 0.1% in 2005 Quarter 1 following two successive quarterly declines, suggesting that the market in the capital may be stabilising.
-There has been a clear north/south divide in house price performance over the past year. Northern Ireland (25%) and Scotland (23%) have experienced the strongest price rises, followed by the three northern English regions – Yorkshire and the Humber (16%), the North West (15%) and the North (14%). Greater London (1%), the South East (5%) and the South West (6%) have recorded the smallest gains.
-The differential between the average price in the south1 and its equivalent in the north1 has continued to narrow with prices in the south £83,000 higher than in the north in 2005 Quarter 1. This is £16,000 lower than two years' ago when the north/south differential stood at a record £99,000.
-There has been further evidence that market activity may be stabilising following a sharp drop in the second half of the year. The latest Bank of England figures showed a modest improvement in the number of loans approved for house purchase in February, to the highest level for four months. Similarly, Halifax Estate Agents report an upturn in sales agreed since the start of 2005.
Commenting, Martin Ellis, chief economist, said: "House prices increased by 0.5% in March, offsetting February's 0.5% fall. The picture on a month-to-month basis remains mixed with four rises and four falls in the past eight months. Overall, however, there has been virtually no change in UK house prices since last September.
"The annual rate of house price inflation continues to slow, dropping below 10% in March for the first time since November 2001, to 9.7%.
"There was a marked contrast in house price performance across the UK during the first quarter of 2005 with the strongest price gains occurring outside England whilst prices fell in the South West, East Anglia and the North. Over the past year, there has been a clear north/south divide with Northern Ireland, Scotland and northern England recording the biggest price increases whilst Greater London, the South East and the South West have experienced the smallest gains. This pattern has caused the differential between the average price in the south and the north to narrow further.
"The increase in interest rates between November 2003 and August 2004, and the difficulties facing potential first-time buyers in purchasing a property, has caused the housing market to slow since mid 2004. The ongoing good health of the UK economy and the associated strength of the labour market, together with historically low interest rates and a shortage of housing supply, however, appear to be limiting the extent of the downturn. There are increasing signs that activity levels are now stabilising and house prices are broadly static at a national level."
Regionally, the strongest house price gains in the first quarter of 2005 were seen outside England. Prices in Scotland (6.1%), Northern Ireland (3.1%) and Wales (2.4%) experienced the biggest price gains during the quarter. Yorkshire and the Humber recorded the biggest rise in England with a 1.7% increase.
The average price in Scotland (£105,397) broke through the £100,000 barrier for the first time in the first quarter of 2005, making Scotland the last part of the UK to reach this landmark. Prices remain highest in London where the average price is £241,918.
The average house price fell in the first quarter in the South West (-1.2%), East Anglia (-0.9%) and the North (-0.6%).
In London, there was a 0.1% rise in prices in 2005 Quarter 1. This marginal increase followed two successive quarterly declines in the capital, indicating that the market in London may be stabilising.
There has been a clear north/south divide in house price performance over the past year. Northern Ireland (25%) and Scotland (23%) have experienced the strongest price rises since 2004 Quarter 1. The three northern English regions – Yorkshire and the Humber (16%), the North West (15%) and the North (14%) – together with the East Midlands (12%) have all recorded double-digit house price gains during the last year.
Greater London has seen the smallest price rises with an increase of only 1% in the past year. The South East (5%) and the South West (6%) have recorded the next smallest gains.
The differential between the average price in the south1 and its equivalent in the north1 has, therefore, continued to narrow with prices in the south £83,000 higher than in the north in 2005 Quarter 1. This is £16,000 lower than two years' ago when the north/south differential stood at a record £99,000 (2003 Quarter 1).
There has been further evidence that housing market activity may be stabilising following a sharp drop in the second half of the year. Whilst the number of loans approved for house purchase is 31% lower than a year ago, the latest Bank of England figures show that there was a modest improvement from 82,000 in January to 85,000 in February (seasonally adjusted figures): the highest level for four months.
This is consistent with the experience of estate agents. Halifax Estate Agents have seen an upturn in sales agreed since the start of 2005 following a decline during the second half of 2004. The latest monthly RICS survey reported that surveyors saw the first back-to-back increases in sales agreed in the first two months of 2005 since last spring. RICS also noted that sound economic conditions and high consumer confidence have supported a stabilisation in housing demand in recent months, which is shown in a levelling out in the number of buyer enquiries.
