House prices rose by 1.0% in March, the second smallest monthly increase since August 2006, according to the latest Nationwide House Price Index. Overall, house prices increased by 2.8% in the first quarter of 2007, well below the 4.2% rise in the previous quarter. The annual rate of house price growth has risen to 11.1%, reflecting the strength of the housing market in early 2006.
House prices increased in all regions during the first three months of 2007. The biggest price rises were in Scotland (7.5%), the South West (5.4%) and Wales (4.9%). The smallest increases were in the East Midlands (0.2%) and Yorkshire and the Humber (0.6%). The average price in Northern Ireland broke through the £200,000 barrier for the first time in 2007 (£206,495). Northern Ireland is now one of the most expensive parts of the UK with only London, the South East and South West having higher average house prices. Two years ago, Scotland was the only part of the UK with lower average house prices than Northern Ireland.
Over the past year, house prices have risen most rapidly in Northern Ireland (37.0%) and Scotland (22.4%). Greater London (14.9%) has recorded the biggest increase in prices in England. The smallest annual price rises have been in the North (5.6%) and the East Midlands (5.8%).
Commenting, Tim Crawford, group economist, said: "House prices rose by 1.0% in March, the second smallest monthly increase in prices since last August. Prices continue to rise in a tight market but there are emerging signs that pressure on householders' finances, partly due to the rise in interest rates since last summer, are dampening housing demand with evidence of reduced market activity. We expect the recent rises in interest rates, negative real earnings growth and above inflation council tax bill increases to lead to slower house price growth over the coming months. Sound economic fundamentals and an ongoing shortage of housing supply will, however, continue to support house prices."
