Smallest Gains Since November

Friday, July 3 2004

Halifax has reported an increase in house prices of 1.2% for June, a fall from previous months, and the lowest rise since November.

However the lender has pointed out that prices rose in all regions, with Scotland and the North and North West showing the largest increases of 12%, 7.8% and 7.6% respectively.

The north/south divide also continues to close, with the average price in the north hot on the heels of the average price in the south.

Martin Ellis, Chief Economist at Halifax, said: ‘There are increasing signs that the four interest rate rises since last November are beginning to curb housing demand.

‘The increased cost of borrowing, combined with the increasing difficulties that aspiring first-time buyers face in getting onto the housing ladder, are expected to exert a downward pressure on market activity and house price inflation over the coming months.’

He did say, however, that he expects house prices to keep increasing, albeit more slowly.

Hamptons agrees with this, stating that they ‘do not predict any significant reductions in prices due to the shortage of stock and continuing high demand,’ for the coming months.

It also got a dig in at Mervyn King, saying that his comments back in June caused buyers to lose confidence, and as a result they lost business.

However, Hamptons also notes in its report for June that the country house market continues to show resilience throughout the UK, with demand high and supply low.