Property market still strong

House prices surged ahead by 1.6% during February as the buoyant property market showed no sign of slowing down, a mortgage group said today.


Nationwide said the market had been boosted by strong demand outstripping supply, combined with low interest rates and increases in take-home pay.

The average price of a house is now ?94,965, up 14% from February 2001, according to the building society. It added that prices had now risen by an average of 11% a year for the past six years. Alex Bannister, Nationwide's group economist, said: "The market is showing no evidence of a slowdown and house prices may rise more strongly this year than we had anticipated.

"Economic conditions are currently favourable and this has encouraged strong demand for property."

Today's figures come after property website hometrack.co.uk reported a 1.4% rise in prices during February, and Britain's biggest mortgage lender Halifax said prices had risen by about 75% during the past decade.

Nationwide said that during the past few months there had been a re-emergence of faster price growth rippling out from London to the surrounding regions, with strong rises seen in east Anglia, the south-west and the east Midlands despite the fact that in London and the surrounding commuter belt they had cooled slightly.

The society said that in spite of recent high profile job loss announcements, the proportion of people employed remained close to record highs, while take-home pay was growing at its fastest rate for two years.

It added that its base mortgage rate was at its lowest level since 1955, and first time buyers now used up only 23% of their earnings on mortgage repayments in the first year, compared with 52% in 1985.

Looking towards the future, the group said that although economic conditions would not be as positive during 2002 as they had been the previous year, there were no obvious factors which would significantly undermine the housing market.

Mr Bannister said: "We believe prices will continue to rise strongly this year, with the ripple effect likely to gather pace. As a result, we expect London and south-east price growth to be held back by increasing affordability constraints and weaker bonuses.


"However, the rest of the country should continue to see double digit price growth as affordability remains good."