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The Guardian
http://www.guardian.co.uk/
Monday May 19, 2003

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House prices rose by 1.3% over the past month as the market received a new lease of life following the end of the conflict in Iraq, figures showed today.

Property website Rightmove said the slight decease in prices seen at the beginning of January had not led to a lasting slowdown in the market. The cost of a home fell by 0.4% during January, but prices recovered to increase by 4.7% during the first five months of the year, equivalent to a strong annual rate of 11.6%, although this is well down on last year's figure of 25%.

The group, which measures the asking price of houses when they first go on the market, said most other house price indexes, which are based on sale prices, were currently reporting the slowdown it saw at the end of last year. During the four weeks to May 14, the number of properties coming on to the market matched the number that were being sold, indicating there was a healthier balance between supply and demand and that the market could be entering a more stable phase.

The group added that there was also evidence of buyers coming back to the market in steadily increasing numbers, as the prospects for both the international situation and the UK economy became clearer.

Northern regions continued to see stronger growth than southern ones, with prices rising by 4.4% in the north, 3.6% in the north-west and 3.3% in Yorkshire. By contrast, prices in London fell by 1% during the month, and rose by just 0.7% in the east Midlands, and 0.9% in the south-east.

Price falls were particularly steep in Kensington and Chelsea, the most expensive place to buy a home in the UK, with the cost of property there dropping by 13% during the month, while in Hammersmith and Fulham prices were down 6%.

Ed Williams, managing director of Rightmove, said: "The springtime surge in homebuying has been late this year as people had their minds elsewhere. Now our agents are starting to see more activity and more transactions are being done. With interest rates low and no real signs of the feared economic slowdown, confidence levels among homebuyers seem to be picking up again."

The Centre for Economics and Business Research said the current shortage of property meant there was only a 5% chance that house prices would collapse. The group said that fewer than 150,000 new houses were built during 2002, the lowest number since the first world war. In its Housing Futures 2023 report it said that although prices can be expected to stabilise and even fall in some areas over the next two years, the shortage of property made it unlikely that the market would collapse.

It predicts that annual house price inflation in the UK will fall from its current rate of 24% to 8.8% by the final quarter of the year. It then expects it to slow further to 3.6% by the end of 2004 and 1.5% by the end of 2005.

But after 2006 it expects house prices to rise at a faster rate than earnings, going up by 6% a year between 2007 and 2013, and 5% a year between 2013 and 2023

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Direct Link:
--http://www.guardian.co.uk/business/story/0,3604,959068,00.html

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