House prices bouncing back

HOUSE prices increased for the eighth time in nine months in March, but experts warn more property being put up for sale could dampen further price rises.

The latest house price index shows prices rose by 1.1 per cent during March, partly offsetting February’s 1.6 per cent fall.

The rise means prices during the first three months of 2010 were 0.6 per cent higher than in the final quarter of 2009.

However, Martin Ellis, housing economist at Halifax, says this was smaller than the 3.6 per cent rise between the third and fourth quarters of 2009 – suggesting a slowdown in the trend rate of house price growth. The end of the stamp duty holiday at the start of the year, along with the bad weather both had an impact on demand, he added.

While the new stamp duty holiday – for first-time buyers on properties costing up to £250,000 – should help stimulate demand, the increase in the number of properties for sale could contain the upward pressure.

“Property sales in England and Wales have increased for three consecutive quarters after reaching a low in 2009 quarter one,” said Ellis. “Indeed, sales in the second half of 2009 were one third higher than in the second half of 2008.”

Meanwhile, Howard Archer, chief European and UK economist at IHS Global Insight, believes house prices will be erratic throughout 2010.