House prices show biggest monthly rise in four years: Fear of unemployment 'remains main deterrent'

HOUSE PRICES rose by 1.2 per cent during March - the largest monthly rise for four years according to the Halifax Building Society.

Prices are 5.2 per cent lower than a year ago, but a Halifax spokesman said the price rise was 'a very encouraging sign'.

'If recovery is occurring then this can only be maintained by sellers continuing to set realistic prices for their properties. Fear of unemployment still remains the biggest deterrent to prospective buyers.'

First-time buyers pay an average of pounds 44,289, which is 7.8 per cent below a year ago, and virtually the same as February. The Budget doubled the stamp duty threshold to pounds 60,000, so the typical first-time buyer will now save more than pounds 400.

Last month's surge, on a seasonally-adjusted basis, was the strongest since March 1989 when the final days of the 1980s housing boom pushed up prices 1.6 per cent. It also marks a turnaround from a depressed 12 months in which prices have risen marginally only twice, the latest a 0.1 per cent rise in November.

Halifax predicted last month that house prices would flatten out over the next few months, then rise towards the end of the year.

A spokesman yesterday stuck by that forecast, saying it was dangerous to read too much into one month's figures, but adding that the pickup could occur 'slightly earlier than expected'.

Increased activity, including inquiries and applications for mortgages, was 'now showing signs of feeding through into mortgage offers', he said. The boost to the bottom end of the market from the doubling of the stamp duty threshold should help sustain the increased activity.

Property, pages 23-28