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April figures confirm gradual slowdown in house price inflation

  • 21/05/2003
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House prices in the UK remained unchanged in April, according to figures from Nationwide. Housing ...

House prices in the UK remained unchanged in April, according to figures from Nationwide.

Housing market analyst went a step further and reported a 0.1% fall in house prices for the month.

Hometrack said the slowdown was most prevalent in the southeast but 23 counties had seen falls overall. Surrey reported the highest monthly fall in prices at 0.9% while Berkshire and East Sussex slipped by 0.8% and 0.6% respectively.

However, not all areas suffered slides, and nationally, 24 counties saw prices rise including County Durham (0.6%), South Wales (0.4%) and Teeside (0.4%).

The changes highlighted a growing north-south divide and pointed to a clear division in the country. From the river Severn to The Wash there is a line above which virtually all prices are rising, and below which virtually all are falling. Hometrack said the national average house price was £135,300. This was higher than Nationwide, which had the figure at £122,748.

Alex Bannister, group economist at Nationwide, said: ‘House prices remained unchanged during the month of April as the trend towards slower house price inflation continued. The annual rate of change slowed to 22.2% from 26.2% in March, in line with our expectation that the market would see a moderation in 2003. House prices over the last three months have risen at their slowest pace since December 2001 and the market is clearly less frenetic than April last year, when prices jumped 3.3%.

‘There is no evidence of a damaging correction at this stage. We expect price growth to return to 0.5%-1.0% over the next few months but remain below the level seen during April-September last year when prices rose by an average of 2.4% per month.’

Falls in the number of new buyers entering the market are also taking the heat out of prices as demand drops. Hometrack reported the number of new properties listed rose by 8% while the number of new buyers rose by less than 1%. Similarly, Nationwide said the number of first-time buyers had continued to fall.

Bannister said: ‘Between 1998-2002 there were on average 46,000 [first time buyers] per month entering the market. This is in stark contrast to the average monthly increase in the owner occupied housing stock ‘ just 18,000 per month. Although the imbalance over the last four years has undoubtedly boosted house price growth, numbers of first-time buyers have fallen sharply in recent months.’

He continued: ‘In the first quarter of 2003, the monthly average number of first-time buyers dropped to 27,000 ‘ more than a quarter down on the same period in 2002. If this trend persists for the rest of the year it will take the number of first-time buyers to around 400,000. This would be the lowest level since mortgage markets were deregulated in the early 1980s.’


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