NI house-price inflation bucking UK tend

Northern Ireland is just one of two UK regions where annual house price inflation is still in double figures, a new report revealed today.

Even though they remained static elsewhere, prices increased by 26.9% with a 12.5% rise in Scotland, Halifax claimed.

Britain’s biggest mortgage lender said nationwide prices edged ahead by just 0.1% during June, but the three rises seen so far this year have been cancelled out by monthly falls.

At the same time the bank said annual house price inflation for the year to the end of June fell to just 3.7%, its lowest level since March 2001.

The figures are in line with those reported by Nationwide Building Society last week that showed annual growth of just 4.1%.

Evidence that the housing market has slowed down increases the scope for the Bank of England’s Monetary Policy Committee to reduce interest rates.

Instead the MPC is expected to wait until August, when it issues its latest quarterly inflation report, to cut rates for the first time in two years.

Martin Ellis, Halifax chief economist, said a combination of higher interest rates and the increasing affordability problems faced by people wanting to get on to the property ladder had caused prices to stagnate.

But he added: “Housing market activity has stabilised following the sharp decline in the second half of 2004 with some signs of a steady improvement in recent months.

“The number of loans approved for house purchase increased for the fifth successive month in May, and Halifax Estate Agents has seen a steady level of sales since February.”

Halifax said that during June annual house price growth fell below average annual earnings growth, currently 4.2%, for the first time since 2001.

It said rises in earnings were expected to continue to outpace house price growth during the second half of the year, causing the house price to earnings ratio to fall from its current level of 5.5, easing the problems faced by first-time buyers.

Wales saw the biggest change in house prices during the three months to the end of June, with the cost of property rising by 4.2%, while in Northern Ireland it increased by 3.9%.

At the same time prices fell by 1.6% in East Anglia, 1.2% in the South East and 1.1% in Greater London during the quarter.

Halifax said that although growth had broadly slowed down across the country, there was still a distinct north/south divide with more subdued or falling prices seen in southern England.

But it added that southern regions had seen the strongest growth during the past 10 years, with prices soaring by 207% in London since the second quarter of 1995, 180% in the South East and 174% in East Anglia, compared with gains of 161% in the North during the same period.

The difference between the cost of the average home in the South of England and one in the North of England is now £80,000 (€116,900), the smallest difference since the end of 2001.

Across the whole of the UK, the average home now costs £162,605 (€237,700).