Newspaper article The Evening Standard (London, England)

House Prices Shock after Biggest Fall for 10 Years; CITY BRIEFING

Newspaper article The Evening Standard (London, England)

House Prices Shock after Biggest Fall for 10 Years; CITY BRIEFING

Article excerpt


THE housing market has started the key spring period in gloomy mood, with prices posting their biggest fall for nearly 10 years in March, Nationwide building society revealed today.

Nationwide said the average price fell 0.6% to [pounds sterling]153,876 - the largest one-month drop since June 1995 when the market was recovering from the early-Nineties crash.

The annual growth rate slowed from 10.2% to 7.9%, its weakest since June 2001.

Despite the surprise fall, it said the market remained on course for a soft landing, with prices expected to rise by up to 5% this year.

Alex Bannister, Nationwide's group economist, said: "Our view remains that the growth of house prices will decelerate throughout the year as the markets adjust to lower levels of demand, choked off by deteriorating affordability and the likelihood of an increase in interest rates in the summer."

Prices continued to rise more quickly in the North in the first quarter.

London recorded the slowest growth, just 3.8% on an annual basis, while prices in Yorkshire and Humberside shot up 15.5%.

The best-performing London borough in the first quarter was Havering, with gains of between 15% and 20%. Other winners included Camden, Wandsworth and Greenwich.

The biggest losers, down more than 5%, were Richmond-upon-Thames, Brent and Tower Hamlets.

Analysts said the report reinforced expectations the Bank of England will leave rates on hold at 4.75% at next week's meeting.

Nick Verdi, economist at Barclays Capital, agreed the March fall was consistent with a gradual slowdown. "Even with our relatively optimistic view of the market, we had pencilled in the odd month of price falls," he said.

Nationwide said the doubling of stamp duty threshold to [pounds sterling]120,000 meant the proportion of first-time buyers in London paying it will fall from 98% to 87%.

A report from HSBC showed consumer confidence stabilised in the first quarter but was well down on a year ago. …

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