House prices rise again

5 April 2007

House prices are still rising at a strong pace, despite recent interest rate rises – that’s according to the UK’s biggest mortgage lender.

The Halifax reported that prices rose by 1% in March, which takes the annual rate of house price inflation to about 11%.  It says the average house price is now £194,362.  The bank explained that a strong economy and a shortage of houses for sale were behind the rise.  However, it added that price growth may cool later this year.

Halifax economist Tim Crawford said there were “emerging signs” that the three interest rate rises since last summer were beginning to have a dampening effect on the market.  He said:  “We expect the recent rises in interest rates, negative real earnings growth and above-inflation council tax bills to lead to slower house price growth over the coming months.”

Last week, the Nationwide noted a similar cooling in the housing market. 

According to the Halifax, house prices increased in all parts of the UK during the first three months of 2007.  Their figures also show that the average price of a house in Northern Ireland has broken through the £200,000 barrier for the first time.  This means that Northern Ireland is now one of the most expensive parts of the UK in which to buy property.  That’s quite a turnaround – two years ago, the province was the second-cheapest part of the UK to buy property.  The boom has been caused by a strong local economy, immigration and demand created by second home buyers.