House price growth increased again in June, according to both the Halifax and the Nationwide. Figures released by the Halifax show that the headline growth rate grew by 0.3% in June and according to the Nationwide, prices increased by 2.6% last quarter. But it is Scotland and Northern Ireland who are now experiencing the price boom, both witnessing double-digit house price inflation in June. Meanwhile house prices in England are increasing at a slower rate, with southern parts of the country leading the momentum.
London had the fastest rate of annual growth in the last quarter, according to Nationwide. Fionnuala Earley, group economist, describes the present growth pattern as ?the ripple effect?. Prices in the capital grew by 4.7% in the last 12 months, well above the average for England of 3.6%.
?The rate of growth has moderated since the first quarter, but remains stronger than at this time last year,? said Ms Earley. ?The areas around London are also seeing higher growth compared with last year, suggesting the ripple effect is still relevant in the UK housing market. There is a clear pattern of acceleration in house price growth in the South in the regions closest to London, compared with last year.?
But while the picture is rosy in the south, the figures point to a clear deceleration in northern parts of the country. Yorkshire and Humberside the North West, and the East and West Midlands all saw a slowdown in the rate of annual house price inflation.
The change in momentum follows several months where the UK housing market has been outpacing economists? predications.
Although the market in England appears to be slowing, economists are not predicting a crash. ?Sound fundamentals, underpinned by a strengthening economy, high levels of employment and low interest rates, will continue to support housing demand over the second half of 2006,? said Martin Ellis, Halifax chief economist. Royal Institute of Chartered Surveyors (RICS) agents are also confident that the housing market is not set to plummet, with agents reporting new enquiries from would-be buyers through out June despite the World Cup.
RICS has welcomed the Bank of England?s decision to leave interest rates unchanged at 4.5%. ?The UK economy is performing significantly better today than at the turn of the year, due in part to robust activity conditions in Europe and Asia which has spurred a rise in manufacturing output and exports,? said Milan Khatri, RICS Chief Economist.