Regional confusion on house prices

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THE STAGNATION of national house prices in the three months to June conceals much higher recent growth in individual regions, according to a breakdown by Halifax Building Society.

East Anglian and East Midlands prices rose 2.4 per cent in the second quarter compared with the previous three months, and Wales rose 2.7 per cent.

The regional breakdown confirms the patchiness of house price movements, exaggerated by the statistical quirks of the two main surveys, from Halifax and Nationwide. On a month-by- month basis they are highly erratic.

The regional breakdown also explains the variation in anecdotal evidence about house prices around the country, with some areas in the South-east, Greater London and East Anglia said by estate agents to be enjoying mini-booms - attributed to spend power from this year's City bonuses.

National prices rose only 1 per cent between the two quarters and in June a 0.3 per cent rise followed two months of falling prices, the Halifax said.

But in the latest three months only two regions showed falls on average and several displayed quarter-on-quarter growth that would amount to a substantial recovery if it continued.

The East Midlands and East Anglian increases followed falls in the previous two quarters, so prices there are only 1.1 and 1.6 per cent up on a year earlier.

In the South-east prices in the second quarter rose 1.8 per cent after small falls in both previous quarters, though the annual rate of increase fell from 4 to 2.2 per cent because of a sharp rise a year earlier.

Greater London prices rose for the second quarter in a row and are now 1.1 per cent higher than in the first quarter and 1.6 per cent above a year ago.

Welsh prices have been on a roller-coaster, so the 2.7 per cent quarter-on-quarter rise left prices only 0.6 per cent above a year ago.

The only price falls were in the North-west, where there has been a slowly falling trend for 15 months, and the Northern region (see map), though the latter has had unusually stable prices for three to four years, resisting the dramatic collapses elsewhere.

However, a year ago prices were rising in all regions, so the Halifax believes the latest regional breakdown shows prices are still fragile in comparison.

The scale of the rise in spring 1993, which appeared at the time to be the beginning of a strong recovery, has also made the annual house price inflation figures harder to interpret. After the national quarter-on-quarter rise of 1 per cent, prices were only 0.6 per cent above a year ago.

The society blamed weak prices on tax increases and higher fixed-rate mortgages as well as low consumer confidence and 'widespread lack of recognition that the economy is experiencing recovery from recession'.

Speculation about a rise in interest rates was unnecessary and could damage the fragile housing market recovery, it added.

(Graphic and graph omitted)

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