House prices increased by 1.1% in March, but Halifax expects to see a marked North/South divide in terms of house prices later this year.
The latest Halifax Price Index predicted annual house price inflation to slow from 26% to 9% by the end of 2003, with rises of 12%-15% in Northern England and Scotland compared to 2%-3% in London and the South East.
Martin Ellis, chief economist at Halifax, said: ‘We expect the difficulties first-time buyers face in entering the market, particularly in the South of England, to increasingly curb demand and cause house price inflation to moderate gradually throughout the rest of 2003.’
He added: ‘Evidence that this constraint is beginning to bite was provided by a fall in the proportion of mortgage lending accounted for by first-time buyers to below 30% of all loans to home buyers for the first time in February.’
A similar picture was portrayed by Hometrack’s national survey for March, which reported 0% house price inflation, mainly due to widespread falls in London and the South East. Both Central London and Berkshire saw falls of 0.4% last month, while Cumbria reported a 0.8% rise.
Rob Clifford, managing director of lender, mortgageforce, said: ‘In the South East house prices rose so dramatically between September and December that any slowdowns in the South are largely academic, and can be viewed as the market retreating to more sensible levels. The market in this country is so fragmented, market conditions change almost on street-to-street basis, and, in this respect, averaging of prices is not always going to be helpful.’
