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Rightmove in buoyant mood over prices

Rightmove was again the most upbeat in its report of the house price indices of 2004, stating that last month&#39s strong growth in prices has been repeated again in April, with a 2.8 per cent rise.

Rightmove says, so far this year, prices are up by 8 per cent compared with last year&#39s rise of 3.8 per cent. London and South-east prices have continued to increase but are not as strong as Yorkshire and Humberside – up by 5.8 per cent – and the West Midlands – up by 5.3 per cent.

According to Rightmove, this is the highest year-on-year house price inflation since last May, with inflation rising in April from 11.9 per cent to 14.4 per cent.

Nationwide is almost as buoyant, citing a 2.1 per cent increase in prices during April. It acknowledges that UK ann-ual house price inflation is now at 18.9 per cent due to the 7 per cent increase in prices since the start of the year.

Nationwide believes that prices are unlikely to fall during the summer but it is expecting the market to cool in the latter half of the year and that interest rates will increase to 4.75 per cent by the year end.

It expresses some concern that the number of first-time buyers remains low and is expecting only 350,000 people to enter the market in 2004.

Group economist Alex Bannister says: “It is existing homeowners, many with large amounts of equity as they purchased their property prior to the recent rapid increases in house prices, who continue to sustain the market by trading between themselves.”

The Halifax house price index says the sector is in good shape despite the record levels of debt in relation to income ratios in the UK. It has shown that the total value of the private sector housing assets was equivalent to about 3.2 times the value of total household debt at the end of 2003 which is healthier than five and 10 years ago when the ratio was 2.7 times.

This is due to the rise in house prices which Halifax says increased by 1.8 per cent in April. The standardised average price for April was £154,304. First-time buyers still remain low, with the total number 2 per cent lower than in the first quarter of 2003.

Chief economist Martin Ellis says: “The difficulties faced by potential first-time buyers in entering the market and the impact of the expected imminent rise in interest rates, together with the increases already seen in recent months, should result in a gradual easing in house price inflation during the second half of the year.”

Hometrack is a little more conservative and has recorded a 0.7 per cent increase in house prices across the country. It claims that the overall average price of a house stands at £150,800 this month from £149,800 last month – more than five times the typical household income.

It records rising prices in all the country&#39s major cities, with Canterbury and Carlisle showing the highest monthly rises of 1.5 per cent.

Housing economist John Wriglesworth says: “Prices continue to rise strongly, with no signs of a slowdown. The only economic factors that could hinder rises in prices over the next year are a doubling of either interest rates, stamp duty or unemployment. No economist in the world is expecting any of these for the UK, even those at the IMF.”

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