Tuesday, March 30 2004

In its figures for March, Nationwide has revised its prediction for house price inflation for 2004 up to 15% from 9%, as rises in interest rates fail to curb the market’s enthusiasm. The move follows independent research company Hometrack’s decision yesterday to revise its forecast from 4% up to 8%.

The mortgage lender found that the price of the average house in March rose 1.4%, bringing the total increase this year to more than 5%. Regionally, the largest increases were seen in Wales and Liverpool, with London and the south east rising more slowly, although this area is said to be picking up.

In the north, the price of the average house went up to over the £100,000 mark for the first time, the report said. However, Nationwide predicted a slowdown in house price inflation by the end of the year, due to anticipated continued increases in interest rates.

Alex Bannister, Nationwide’s Group Economist said: ‘While the latter half of 2004 is likely to see slower growth in prices a slump remains unlikely. Despite a rise in interest rates, there is little chance of a significant economic downturn this year.

‘Some commentators fear a collapse in the buy-to-let market will undermine property price growth. However, while rental yields are low, most recent buyers have reasonable gains and view property as a relatively long-term investment.’