House price growth continued during March with the cost of property rising by 1.1 per cent, but is down on previous months. However, the growth is down on February's jump of 1.8 per cent and January's increase of 1.5 per cent, suggesting the market is gradually slowing.

Agents report an increase in the number of properties coming on to the market, and this is helping reduce some of the upward pressure on prices. The annual increase in house prices is reported as 23.4% and the average house price is now £127,040.

Details from the Halifax report:

• House prices increased by 1.1% in March. Halifax Estate Agents reports a continuing increase in the number of properties coming on to the market, which is helping to reduce some of the upward pressure on prices.
• Regional figures for the first quarter of 2003 show that the biggest rises in prices between the final quarter of 2002 and the first three months of this year were in the North (8.1%), East Anglia (7.4%) and Wales (6.2%). This underlines our view that house prices will rise most strongly this year outside London and the South East.
• Regionally, on an annual basis, the East Midlands has seen the biggest increase in house prices (34%) followed by the North (31%) and Yorkshire and the Humber (28%). All other regions have experienced rises in double figures with the exceptions of Scotland (9%) and Northern Ireland (-1%). The annual rate of house price inflation in both the North and Yorkshire and the Humber is the highest since the second half of 1989.
• Greater London has slipped down the regional house price inflation table in recent months with the 19% rise over the past year putting the capital ninth out of the 12 UK regions. Prices in the capital increased by 2.7% in the first quarter, continuing the slowdown in prices in London since the second quarter of 2002 when prices increased by 5.9%.
• We expect a marked north/south divide during 2003 with the market slowing to a much greater extent in the south. In contrast, conditions across northern Britain are set to remain buoyant, making this the 'year of the north'. Overall, we expect annual house price inflation to slow from 26% at the end of 2002 to 9% at the end of 2003 with rises of 12-15% in northern England and Scotland compared to 2-3% in London and the South East.

Commenting on the figures Martin Ellis, Chief Economist, said:

“House prices increased by 1.1% in March. Halifax Estate Agents are reporting a continuing increase in the number of properties coming on to the market, which is helping to reduce some of the upward pressure on prices. The historically low stock of properties available for sale over the last few years has been contributing to the rapid rise in prices.”

“Prices rose by 4.4% in the first three months of 2003. Whilst this is equivalent to a still strong annualised rate of 19%, it is slower than the pace of house price growth recorded in 2002 when prices rose by 26%.”

“Factors that have been supporting strong demand are still in place. Mortgage rates are at their lowest since the late 1950s, unemployment remains low, and mortgage payments account for a lower proportion of a new borrower's income than at any other time in the past 20 years.”

“We expect the difficulties that first-time buyers face in entering the market, particularly in the south of England, to increasingly curb demand and cause house price inflation to moderate gradually during the rest of 2003.”

“There will, however, be a marked north/south divide with the market slowing to a much greater extent in the south. In contrast, conditions across northern Britain are set to remain buoyant, making this the year of the north.”

“Overall, we expect annual house price inflation to slow from 26% at the end of 2002 to 9% at the end of 2003.”