House price rise set to slow down

From the Swindon Advertiser, first published Friday 3rd Jan 2003.

HOUSE prices rose by £88 per day in the South West last year, according to Swindon finance giant Nationwide.

The total increase in the South West was 31 per cent ­ more than the national average of 25 percent.

Nationwide predicts more moderate growth this year, with no repeat of the collapse in prices seen during the 1990s.

In its review of the year, the building society says strong growth continued last month, with the national average cost of a home increasing by 1.7 per cent to £117,206.

It is expecting further double-digit growth this year, and predicts that house prices will rise by 10 per cent during the next 12 months.

But its report adds that, while some regions could see the cost of property rise by 15 per cent, it was "highly likely" that certain parts of London and other property hotspots will see price falls.

Alex Bannister, Nationwide's group economist, said: "The housing market remained strong in December, with prices up 1.7 per cent, to close out the fastest year of house price growth since 1989."

House sales last year also look set to record the highest level of turnover since 1989, with around 1.6 million properties changing hands, or 4,400 a day, while mortgage lending is expected to have reached £215 billion for the year, up 36 per cent on 2001.

But Nationwide is expecting house price growth to slow this year, as higher mortgage rates, unemployment and weaker real income growth all take their toll on consumer confidence.

During 2002, the strong price growth seen in London and the South East in previous years continued to "ripple out" to the rest of the country.

Yorkshire and Humberside saw the strongest overall rise, with house prices 35 per cent higher during the final quarter of 2002 than for the same period in 2001.

Mr Bannister said: "A regional growth pattern has developed since 1997, with prices originally rising fastest in the South East before the hotspots moved to regions such as the Midlands and East Anglia and finally on to Wales and the North.

"This is broadly similar to that of the mid to late eighties.

"The tendency for the South East housing market to lead the rest of the UK is known as the `ripple effect' and our latest regional prices suggest that we are moving into the phase when the fastest rising regions are in the West and North.

"Although the `ripple' is becoming more marked we do not expect a repeat of the collapse in prices seen during the 90s."

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