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Halifax raises its forecast for house price growth in 2003

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  • 15/07/2003
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Although house price growth continues to slow, the market is still robust enough to force Halifax to...

Although house price growth continues to slow, the market is still robust enough to force Halifax to adjust its growth forecast upwards for 2003. The lender’s House Price Index shows a 0.6% increase in prices for June. Prices in the first half of this year rose by 7.1%.

Martin Ellis, chief economist at Halifax, commented: ‘Following our usual six-month review, we are slightly adjusting our forecast for house price growth in 2003, increasing it from 9% to 10%. There is a possibility that the final outcome could well be house price growth of more than 10% this year.’

Figures show prices increasing most strongly outside London and the South East. The second quarter’s largest rises were in the North at 8%, Yorkshire and the Humber (6.8%) and West Midlands (5.5%). Prices fell in London (-0.9%) and the South East (-1%). As a result, the gap between the average UK price (£129,443) and average London price (£218,404) in the second quarter, narrowed to £89,000 from a record £95,000 in the first quarter of 2003.

Halifax notes high prices have restricted demand in the South, particularly among first-time buyers who accounted for only 31% of purchases in the first five months of 2003, compared with 38% in 2002. Ellis said: ‘As a result, we expect the market in the South to pause for breath during the remainder of the year. There also remains a persistent shortage of homes in the South, a phenomenon that will continue to support prices in London and the South East over the medium and longer terms.’

Halifax’s standardised average house price now stands at £130,312, which is close to Nationwide’s average of £127,214. Nationwide’s House Price Index for June showed a monthly change of 0.9% and indicates a rise of 6.7% in the last six months. It also noted the North East, Yorkshire and Humberside have broken through the £100,000 average house price for the first time.


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