House prices increased slightly in March, pushing the
average price above the £175,000 level for the first
time. According to the Halifax House Price Index, prices
rose by 0.9% during the month and by 1.6% during the first
quarter of the year.
That was smaller than the 2.3% gain seen during the
final quarter of last year, but enough to push the average
house price to £175,215.
Although March's rise was less than the 1.5% increase
reported by the Halifax in February, it was nonetheless
the sixth increase in a 0.9-1.9% range reported by the
lender in the past eight months.
The Halifax said housing demand is currently well underpinned
by a strengthening economy, high employment and low interest
rates, but warned this could tail off.
Halifax chief economist Martin Ellis said: 'The rise
in prices in the first three months of 2006 was, however,
smaller than the gains recorded in the two final quarters
of 2005. There are also signs that housing market activity
may be beginning to level off.'
He added: 'The weakening in the labour market, the continuing
high level of house prices in relation to earnings and
pressure on householders' finances from the recent hikes
in utility and council tax bills are all expected to curb
demand in the coming months, therefore preventing a sustained
acceleration in house price inflation.'
The largest price rises in the first quarter were in
Wales, East Anglia and East Midlands. The North was the
only region to record a fall during the quarter, with
prices falling by 1.2%, although prices in that region
are 147% up over a five-year period. The North South divide
is now at its smallest for eight and a half years, according
to the bank.
Howard Archer, chief UK economist at Global Insight,
said: 'We have raised our forecast for house price inflation
over 2006 to 5%. For now at least, the Bank of England
will be very wary that a trimming of interest rates could
excessively stimulate the housing market and risk send
housing prices markedly higher.
'This significantly reduces the prospects of any interest
cut until at least August, and it certainly further rules
out a move today.'
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