Commenting on the figures Fionnuala Earley, Nationwide's chief economist, said: “Prices increased by at least 5% in every region of the UK over the past 12 months, with 5 out of 13 regions recording double-digit growth. Each region also saw prices rise from the previous quarter on a seasonally adjusted basis. As per the first quarter of 2007, Northern Ireland and London led the market during April-June, with annual price growth reaching 54% and 15.7% respectively. In contrast, the North West and West Midlands saw the weakest annual change in house prices, of 5.8% and 5.9% respectively.
“At a national level, the annual rate of house price growth increased slightly from the first quarter, rising from 9.5% to 10.2%. This masked a slowing of the quarterly pace of growth for the second quarter in a row, from 2.3% to 2.1%. In fact, the acceleration of annual house price inflation was in part driven by an interim period of relative weakness in the second quarter of 2006. Even London and Northern Ireland – the two most buoyant regional markets – saw the quarterly pace of house price inflation slow.
“In England, the North-South gap that began opening up last year remained significant in the second quarter. House price growth in the South outpaced that in the North by 5.6 percentage points. Within England, London saw the fastest pace of price growth by a considerable margin. In fact, annual growth in London outpaced the average for England as a whole by 6.1 percentage points. The regions surrounding the capital all showed double-digit price growth, perhaps indicating some ripple effects from London’s strength. Although the quarterly pace of house price inflation in London slowed from 4.5% to 3.1%, the annual pace of growth accelerated from 14.3% to 15.7%. This contrasts with relatively soft annual growth of 5.8% in the North West, the region with the weakest growth for the second quarter in a row. Other regions of relative weakness include the West Midlands, Yorkshire and Humberside, and the North.
“The speed of house price growth in Northern Ireland remains astonishing and well above that of other UK regions, although it looks like the market there may have peaked in the first quarter of the year. Over the past twelve months, prices in Northern Ireland have risen by 54%, down from an all-time record high rate of 57.6% in the first quarter. Recent growth rates appear unsustainable, and it would be healthy for the market to see some cooling. Average earnings in Northern Ireland are still lower than the UK average, suggesting that affordability is deteriorating fairly rapidly and that the market here could be more vulnerable than in other regions.
“Scotland maintained its strong performance in the second quarter, with only slight signs of cooling. Prices increased by 14.7% over the past 12 months, the third fastest rate of growth in the UK and the fifth consecutive quarter of double-digit growth. Even after the robust growth seen over the last year, Scotland is still one of the least expensive markets in the UK, second only to the North of England.
“The Welsh housing market showed some re-acceleration in the second quarter. House prices are 7.4% higher than this time last year and 2.6% higher than in the previous quarter. A typical property in Wales is now worth just under £155,000, more than £10,000 higher than at this time last year."
