Spring signals new housing boom


The UK's largest building society has revised up its forecast for house price growth in 2004.
Nationwide said it expected house prices to rise by 15% over the year, rather than by the 9% it estimated at the beginning of the year.

Property prices rose by more than 5% during the first three months of the year, and by 1.4% in March alone.

The average property in the UK now costs £142,584, 16.7% more than at this time last year.

The move by Nationwide comes just days after property website Hometrack doubled its 2004 forecast for price rises in England and Wales from 4% to 8%.

Nationwide's latest survey is likely to increase pressure on the Bank of England to raise interest rates in the near future.

Slowdown

Although Nationwide has revised its forecast upwards it expects the market to cool down a little towards the end of the year.


Alex Bannister, Nationwide's Group economist, said: "While the latter half of 2004 is likely to see slower growth in prices a slump remains unlikely.

How forecasts vary by region
"Despite a rise in interest rates, there is little chance of a significant economic downturn this year."

Recent speculation about instability in the buy-to-let market was unfounded, he said, as "most recent buyers have made reasonable gains and view property as a relatively long-term investment".

Growth areas

The UK's housing market has become increasingly twin-track: prices are racing ahead in affordable areas outside London, while the market within the South East is experiencing relatively modest growth.



Prices have risen by more than 36% in Wales over the last year, by more than 33% in the North and by 23% in Scotland, Nationwide said.

The increase in the North of England took the typical house price there above the £100,000 mark for the first time.

Liverpool, the 2008 Capital of Culture, experienced the biggest price rise in the country.

Halton, in the north-west of England, and the Welsh Carmarthenshire and Powys regions were also in the top 10.

Once again, it is the more expensive areas in London and the South East that have seen prices rise the least, although better employment prospects and bonuses were "strengthening the market".

London remains at the foot of the table, with prices rising 6.3% year-on-year.

"The slowdown in growth can be partly attributed to the fall in financial sector employment, but also to a downward revision in expectations of future house price growth," said Nationwide.


House price forecasts by region

Region New forecast Old forecast
North of England 24% 12%
Wales 23% 9%
North West 21% 11%
Yorks & Humberside 17% 12%
N. Ireland 16% 11%
Scotland 15% 9%
UK 15% 9%
East Midlands 14% 9%
East Anglia 14% 7%
West Midlands 14% 9%
Outer S. East 13% 8%
South West 13% 10%
Outer London 10% 6%
London 10% 6%


Source: Nationwide