UK house prices rose by 2.2% in March, following a 0.4% fall in February, reveals the latest Halifax house price index.
Commenting, Martin Ellis, housing economist, said:
“House prices in the first quarter of 2012 were little changed compared with the final quarter of 2011, showing a decline of just 0.1%. This was the same as the slight fall recorded between the third and fourth quarters of 2011.
“The underlying trend therefore indicates broad stability in UK house prices. The more volatile monthly figures continue to fluctuate as a result of the historically low level of sales volumes, increasing by 2.2% in March following February’s 0.4% fall.
“Efforts by first-time buyers to beat the expiry of the stamp duty holiday at the end of March have probably increased sales in recent months and may have helped to support prices.
“We continue to expect little overall movement in prices this year provided that the UK economy does not suffer a pronounced weakening.”
House prices in the three months to March were 0.1% lower than in the previous three months. This was the same as the decline in prices on this measure of the underlying trend in December 2011 (-0.1%).
On a monthly basis, house prices increased by 2.2% in March. This followed February’s 0.4% fall as prices continue to fluctuate month-to-month as transactions levels remain historically low.
Prices in the first three months of 2012 were 0.6% lower than in the same period last year. This was the smallest fall in prices on this measure of the annual rate since October 2010 (+1.2%).
The average UK house price is at the same level as in July 2011. The UK average price in March 2012, at £163,803, was almost identical to that in July 2011 (£163,765).
Signs of a pick-up in house sales
The number of completed house sales has risen to its highest levels since late 2009. The number of sales in January and February was a seasonally adjusted 81,000 in both months. This was 14% higher than in the same period last year.
Housing market conditions have tightened modestly in recent months
Market conditions, as measured by the ratio of house sales to the stock of unsold properties – reported by the RICS’s monthly survey – have tightened slightly in recent months, driven by the increase in sales. This modest improvement in market conditions has probably helped to support house prices.
The recent increase in sales may have been driven by first-time buyers seeking to beat the end of the stamp duty holiday. The proportion of house purchasers who are first time buyers increased between the final quarter of 2011 and the first quarter of 2012.
This suggests that the ending of the temporary increase in the starting threshold of stamp duty for first-time buyers from £125,000 to £250,000 in late March encouraged some to buy before the threshold reverted to the lower level. An extra four in ten first-time buyers – 150,000 in total – have been exempt from paying stamp duty as a result of the Government temporarily doubling the starting threshold over the past two years.
Kristjan Byfield, director of sales and letting agents, Base Property Specialists, said:
“The mad spike in March was a combination of extremely low sales volumes still skewing the figures and the brief rush to beat the stamp duty deadline. The quarterly change of -0.1% paints a far more accurate picture of the UK property market.
“The danger is that seeing headline price rises like this will make sellers even more unrealistic about their asking prices. People read the headlines and they act accordingly. The truth is that the UK property market is a pastiche of micro markets. Move just three streets to the right and a property can be worth hundreds of pounds per square foot less or more.
“The sooner we stop talking about a UK market, the better, because it’s that far off the mark. In just one week, we’ve had prices down 1% from the Nationwide, up 0.2% from Home Track and now up 2.2% from the Halifax. That says it all. The house price indices are more about PR than they are property.
“Property owners wishing to know the true market value of their property should rely on recently sold, comparable properties in their local area, which can be found online or at the Land Registry.”
Liya Fateh, director at estate agent review website MeetMyAgent.co.uk, said:
“Taken at face value, the almost endless stream of house price indices seems to be suggesting that house prices are yo-yoing up and down. One set of data is up, the next is down. With such a lack of consistency in the numbers, both buyers and sellers should approach them with caution. The volatility is down to a sad but inescapable fact – the number of property sales is very low.
“A recent MeetMyAgent survey of 200 estate agents revealed that buyer enquiries are on the increase, with three-quarters of estate agents reporting more viewings than this time last year. But these viewings aren’t translating into sales, and it’s easy to see why. Four out of ten agents believe that almost a third of their stock is overpriced and 85% admit they’re still suffering from a lack of godo quality stock.
“There are a lot of sellers who are unwilling to drop their prices and are happy to wait for the right offer because servicing their mortgages remains relatively cheap. While buyers, despite being motivated and in a position to buy, are often quite happy to shop around for as long as it takes to find the right property at the right price.
“With stock in short supply and a lack of urgency from both buyers and sellers, the whole buying process from viewing to offer is taking much longer than it would normally do in a healthy property market, with at least 10 viewings on a property before securing a sale.”