Biggest jump in house prices since 1997

HOUSE PRICES last month recorded their biggest increase since September 1997, according to new figures from Nationwide. It was the latest sign that the housing market is recovering from its winter downturn.

"House price inflation could be heading back towards double figures," said Jonathan Loynes, an economist at HSBC Markets.

Nationwide, which publishes one of two monthly house price indices, said prices jumped by 1.5 per cent in March, taking the year-on-year increase to 7.6 per cent. This followed a subdued February, when prices rose by just 0.1 per cent.

Halifax said its March index, published next week, is likely to show a slight increase. Its price figures have been well below Nationwide's for the past two years, and showed a 0.5 per cent drop in February.

David Parry, Nationwide's head of planning, said: "Although spring usually produces an upturn in the housing market, there are tentative signs the recent series of interest-rate cuts have helped boost confidence."

The Easter weekend is a crucial time for the housing market, traditionally bringing a big upturn in sales.

Other indicators have pointed to a revival in the market. Surveys of estate agents and figures on mortgage approvals have both indicated the start of a recovery. In addition, underlying conditions are favourable; mortgage rates are at their lowest for more than 30 years, and properties are affordable by past standards.

However, this month's Budget dealt a blow by abolishing mortgage tax relief from April 2000.It also raised stamp duty on properties priced at above pounds 250,000, which will dampen the top end of the market.

But the biggest question mark over the outlook for house prices remains the length and severity of the economic downturn. "We have had the interest- rate cuts, but nobody has felt the pinch of rising unemployment yet," said Mr Loynes.

Although most forecasters reckon the slowdown will be moderate, few are as optimistic as the Treasury, which is predicting 1 per cent growth this year. Unemployment rose slightly last month, according to the latest official figures.

Even so, the Bank of England is expected to cut rates further. The Monetary Policy Committee could act as soon as next week, according to some analysts.

The average UK house price stands at pounds 68,308 on Nationwide's figures, up from pounds 63,493 a year ago.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test