House prices up but picture is patchy: Halifax says recovery is under way but others are not convinced. Vivien Goldsmith examines the latest figures

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The Independent Online
HOUSE PRICES have risen by 3.2 per cent over the past quarter, according to the Halifax house price index.

Home owners have been getting conflicting signals from the monthly house price checks conducted by Halifax and Nationwide building societies. Some months one shows a rise and the other a fall.

In June Halifax recorded a fall of 1.1 per cent, while Nationwide reported an increase of 1.6 per cent. The discrepancy can be attributed to several factors: variations in sample sizes, regional mixes and different closing dates.

The quarterly figures give a better feel for the trends as they iron out the month-to-month fluctuations.

Gary Marsh, housing economist at Halifax, said: 'We are still reasonably optimistic. We are bumping along the bottom in price terms. Recovery is certainly under way.'

The quarterly rise in house prices of 3.2 per cent may give an over-optimistic picture, as the year began with a poor month, but April was a bounce in price rises.

The second-quarter figures cover the traditional house-buying season of April, May and June, which tends to show the strongest price rises of the year.

These figures are not adjusted to take account of these seasonal variations. Mr Marsh said that even if seasonal factors were taken into account, the quarter would still show a rise, but not such a large one.

House prices are levelling out across the country and the areas that suffered the sharpest falls now show the biggest rises. The largest rise, of 5.1 per cent, is in East Anglia, while the smallest, 1 per cent, is in the West Midlands.

The picture over the past year still shows a drop in house prices in all regions except Scotland and Northern Ireland, which earlier missed out on the dizzy rises.

Greater London has shown the largest drop since the spring of last year - 5.1 per cent. Although it is still the highest-priced region, average prices are now only 1.4 times those in Yorkshire and Humberside, compared with 2.8 times early in 1988.

Halifax estate agents say that business is patchy - up one week and down the next. In the South, they say that many householders are trapped by negative equity and cannot contemplate putting their homes on the market. This has led to a shortage of properties for sale as first-time buyers begin to come into the market.

First-time buyers and the top of the market are showing the most active signs of life, according to Halifax.

The average price paid by first-time buyers rose by 0.3 per cent in June, but is 5.3 per cent below a year ago, at pounds 45,465. These buyers had an average income of pounds 13,178 and borrowed 89.6 per cent of the price of the property.

The average price paid during the spring quarter was pounds 65,025 - ranging from pounds 48,780 for flats and maisonettes to pounds 59,612 for semi-detached houses and pounds 105,454 for detached properties.

The prices of new homes rose in the North, Wales and Scotland. The largest fall in the prices of new homes was in Yorkshire and Humberside, where prices were cut back by 2.3 per cent during the quarter. The average price paid for a new home is now pounds 68,062.

John Wriglesworth, housing analyst at the stockbroker UBS, said the housing market was stagnating. 'We are not going into an abyss, but also we are not going towards an early recovery.'

He believes confidence in the recovery of the housing market is being held back by fears of tax rises in the autumn Budget.

(Photograph and map omitted)

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