House prices rose by 2.6% in the first three months of the year, bringing the average property price to almost £193,000, said Halifax.
The quarterly figure was buoyed by a 0.4% house price increase in March, following a fall of the same size in February. House prices were up 8.1% on the previous March, well below July’s peak in annual inflation of 10.2%. The figures are based on mortgages approved by the bank, adjusted to reflect a typical home.
Overall, Halifax said it expected house prices to end 2015 between 3% and 5% higher than they started it.
“The recent return to real earnings growth for the first time in several years, very low mortgage rates and last December’s stamp duty changes are supporting housing demand,” said Martin Ellis, housing economist at Halifax.
“The rising level of house prices in relation to earnings should, however, curb house price growth and activity.”
Howard Archer, chief economist at IHS Global Insight, agreed with Halifax’s forecast of 5% annual growth in 2015. “We suspect that housing market activity is now turning around gradually after losing appreciable momentum from the early-2014 peak levels, and we see activity picking up modestly over the coming months,” he said.
However, Archer urged caution in taking Halifax’s findings in isolation as “the Halifax data have been notably more volatile than other house price measures in recent months and stronger overall than most”.
Rival lender Nationwide building society reported that UK house prices rose by 0.1% in March, but said that in some parts of the country prices had fallen since the start of the year.
The UK’s biggest building society said that the annual rate of growth softened for the seventh consecutive month, and stands at 5.1%, against its recent peak of 11.8% in June 2014.
A continued rise in house prices is further bad news for potential first-time buyers, many of whom have given up the idea of ever owning their own home, according to the latest edition of Halifax’s annual Generation Rent report.
The proportion of people aged between 20 and 45 putting money aside for a deposit had been steady for three years but fell last year by six percentage points to 43%, it said on Tuesday.
