Property price boom continues apace

The rate of house price inflation increased for the third consecutive month in March, official figures showed today.

The Office of the Deputy Prime Minister (ODPM) said annual house price inflation in the UK increased to 12.6% for the year to the end of March, up from 10.5% in the 12 months to the end of February.

It recorded a 2.1% jump in March in prices for houses of all types, which pushed the average cost of a home up to £183,346. Detached houses rose by an average 3.5%, and flats went up 2.9%.

The rate at which prices rose increased in all areas of the UK expect Yorkshire and the Humber, where annual house price inflation eased slightly to 16.9% from 18.2% the previous month.

Wales saw the biggest year-on-year gain of 22%, followed by the north-east at 19.4% and the north-west at 19.2%.

Annual price gains remained in single figures in London, the south-east and the east, however. The rate of growth in the capital rose to 9.8% from 7.1% for the year to the end of February, while in the south-east it reached 8.1%, up from 5%.

London remains the most expensive place to buy a property with prices averaging £267,117, followed by the south-east at £234,863.

Scotland and the north-east are the cheapest places to purchase a home with the average property in these regions setting a buyer back by £124,223 and £131,070 respectively.

First-time buyers in the UK are now paying an average of 18.3% more to get on the property ladder than they were in March last year, with their first home costing around £149,470; owner-occupiers are paying an average of £198,681, 10.5% more than in March 2005.

Howard Archer, chief UK economist at consultancy Global Insight, warned that the rise in house prices should not necessarily be taken as a sign of renewed strength in the property market, and said prices were softening overall.

"While latest data and survey evidence relating to housing market activity has largely shown stabilisation (and in some cases very modest improvement), this is at a relatively low level and at least partially reflects seasonal factors," he said.

Mr Archer added that although the property market still favours buyers, very few people are selling because they are being forced to, and are prepared to leave their house on the market rather than negotiate on the price.

"While this situation continues, there seems little likelihood in the near term of a significant move back up in house prices, or in a sharp correction occurring," he said.

Last week Britain's biggest mortgage lender, Halifax, said annual house price inflation had fallen to just 7.8% for the year to the end of April, its lowest level since June 2001. In March, it recorded a price rise of 9.7%.