Buy-to-let
The annual rate of house price growth in the UK remained stable, but the quarterly growth rate fell from 2.2 per cent to 0.9 per cent, according to Nationwide Building Society.
The Society’s latest report shows that England lagged behind the other parts of the UK with prices growing at 3.6 per cent over the year, compared with the UK average of 4.8 per cent.
Statistics from Halifax show that house prices fell by 1.2 per cent in June, but increased by 4.5 per cent in the first half of 2006 with a 2.6 per cent during 2006 Quarter 2.
Prices in Wales grew at the same rate as the UK average, but Scoltand and Northern Ireland saw double-digit annual house price inflation of 10.7 per cent and 24.9 per cent respecitvely, according to Nationwide.
In England, the report shows that the fastest annual rate of house price growth was in London where prices increased by 4.71 per cent, marginally faster than East Anglia (4.70 per cent) and Yorkshire and Humberside (4.67 per cent).
The Northern region saw the slowest annual growth rate at a mere 1 per cent.
The return of the ripple effect
“The areas around London are seeing higher growth compared with last year suggesting the ripple effect is still relevant in the UK housing market,” comments Fionnuala Earley, Nationwide’s group economist. “London, East Anglia, outer South East and outer metropolitan areas are all seeing annual house price growth at around the same level or higher than at this time last year.”
No need to panic
Martin Ellis, chief economist at Halifax says: “Sound fundamentals, underpinned by a strenghtening economy, high levels of unemployment and low interest rates will continue to support housing demand over the second half of 2006, ensuring that the market remains in good health.”
Ellis expects the annual rate of house price inflation to easy, partly because the corresponding figures from last year were strong.
“Pressure on householders’ finances from utility bills and council tax rises, combined with speculation of higher interest rates are also likely to contrain demand.”
Supply pressures
Scarcity of housing supply is a major factor in the UK and one that will help to support house prices in the longer term, believes Earley.
Nationwide estimates that there may be as many as 200,000 frustrated households unable to move at the end of 2006 due to insufficent housing supply.
Lack of housing supply is most pressing in the South of England. Nationwide estimates that that in London and the South East, the increasing gap between the available stock and the projected number of households could b as buch as 112,000.
But the pressures are spreading beyond London, with estimates showing that East Anglia and the Midlands could together face a deficit of 70,000.
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