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.