Residential property prices in the UK edged upwards for the third month out of four in March, up 0.5% from last month, according to the latest figures from the Nationwide Index.
The data shows that prices have increased 0.6% on a quarterly basis and are now 0.1% higher than a year ago but the picture is mixed and varies on a regional basis.
During the first three months of 2011 property prices have increased in eight out of
13 regions with Yorkshire and Humberside seeing the strongest quarterly price rise, up 3.4%, and Northern Ireland slipping back with a 2.2% fall.
The North was the weakest performing English region over both the quarter and the year, with prices down 1.5% year on year. The Outer Metropolitan region saw the strongest growth on an annual basis, with average prices 2.7% higher than the first quarter of 2010.
Quarterly price growth in London rebounded after a weak figure in the last three months of 2010, with a seasonally adjusted price increase of 2.3%. Prices in the capital were up 2.1% compared with the same quarter one year ago.
Scotland saw a 0.3% quarter on quarter rise, but the annual rate of change was unchanged, with prices down 2% year on year. Whilst Wales saw a 0.6% rise in the quarter, this was not sufficient though to prevent a further decline in the annual rate of change of 2.6%. Wales was the second weakest region on an annual basis behind Northern Ireland.
‘The outlook remains uncertain, but all things considered, this is unlikely to mark the beginning of a strong upturn in prices. The economy entered a soft patch at the back end of 2010, and there have been few signs of a strong bounce back. The jobs market remains challenging and Nationwide’s Consumer Confidence Index suggests that sentiment has fallen to an all time low in recent months,’ said Robert Gardner, Nationwide’s chief economist.
‘While demand is likely to remain fairly soft, a rapid increase in the supply of properties also appears unlikely. Low interest rates and a stabilisation in labour market conditions have prevented a rise in forced selling, and the subdued market outlook is deterring many sellers from entering the market,’ he explained.
‘With the economic recovery expected to remain sluggish, the most likely outcome is that the property market will follow suit, with low transaction levels and prices moving sideways or modestly lower through 2011,’ he added.
He also said that interest rates would play a key role in the recovery of the housing market. The Bank of England is likely to start the process of returning interest rates to more normal levels at some point in 2011.