The housing market continued to go from strength to strength in June despite negative publicity over the property shortage, the foot and mouth crisis and pessimistic economic forecasts.
The latest house price surveys from Nationwide and Halifax report a strong increase in house prices, and forecast a positive outlook for the rest of the year.
Halifax reports that house prices rose by 1.6% in June and house price inflation has climbed to 9.7% ‘ the highest since May 2000. The survey puts the average house price at £92,122.
The report from Nationwide puts the increase in house prices even higher at 1.9%, although the average house price is slightly lower at £89,068.
Alex Bannister, group economist at Nationwide, said: ‘June’s strong monthly increase of 1.9% has pushed up annual house price inflation to 9.3% as strong customer confidence continues to buoy up the housing market. The first quarter had shown signs of a gradual cooling off in London, with the annual price growth slowing to 5.6%. In contrast, the second quarter has seen prices in the capital rise at an annual pace of 10.4%. With the economic outlook likely to deteriorate modestly in the face of a weakening world economy, we are holding our forecast for 7% by the end of 2001.’
However, the National Association of Estate Agents (NAEA) predicted a steadier rise in house prices for the rest of the year. The most recent NAEA survey found that despite a number of regional variations, estate agents around the country predict house prices to have risen by an average of 6% during the year. In Scotland growth is expected to be around 4%, while in the south east and south west prices are predicted to be up 7.2% and 8% respectively.
Hugh Dunsmore-Hardy, chief executive at the NAEA, said: ‘Although house prices did rise at a higher than expected rate during the first half of the year, there are suggestions that sellers are taking the advice of estate agents on prices and they are being realistic about affordability in the marketplace.’