House price increase reported for March leaves most economists cold

martin ellis
Martin Ellis: FTBS helped house prices

A 2.2% increase in house prices in March has been downplayed by economists.

The latest Halifax house price index shows values rose 2.2% in March, following a monthly fall of 0.4% in February and a drop of 0.1% in the three months leading up to March.

The average price of £163,803 in March was almost identical to that in July 2011 – £163,765.

Prices in the first three months of 2012 were 0.6% lower than in the same period last year.

Martin Ellis, housing economist at Halifax, says first-time buyers trying to beat the end of the Stamp Duty holiday have probably boosted sales in recent months and may have helped support prices.

He says: “We continue to expect little movement in prices this year provided the economy does not suffer a pronounced weakening.”

Halifax’s March increase is in stark contrast to Nationwide’s index which shows prices fell by 1% in the month to reach £163,327.

The two indices calculate their figures differently, with Halifax looking at the whole calendar month and Nationwide cutting its data off earlier in the month.

Ed Stansfield, chief property economist at Capital Economics, says the rise in March simply reverses the dip seen since last July.

He says: “We would not be inclined to read much into the latest rise in the Halifax index or the divergence with Nationwide. The jump in the Halifax index simply offsets the falls recorded in the previous six months or so.
“The month-by-month volatility of both indices illustrate the problems of accurately measuring house prices.”

He believes any further correction in prices is likely to proceed along a slow and potentially bumpy path.