House price rises slow to 8%

ANNUAL house price inflation in the UK fell from 9.8% in February to 7.8% in March, according to Government figures.

The slowdown conflicts with signals from major lenders that the market is still booming. Halifax's March survey said prices rose 18.5% on a year earlier - and last month the rate accelerated to 19.1%.

Economists said the latest figures added to the confusion over the pace of house price growth. But Simon Rubinsohn, chief economist at broker Gerrard, said: 'This survey captures a broader range of transactions and is therefore worth paying attention to. It has consistently shown slower rises than surveys from others, some of which have a financial interest in the health of the property market.'

In terms of home countries, the largest fall in annual inflation was in Scotland, down from 26.2% to 22.3%, and the smallest was in Wales, down from 21.7% to 20.5%. The only country where the property market picked up was Northern Ireland, with annual price rises edged up from 6.5% to 7.6%.

Regionally, only the South West saw price inflation accelerate, from 4.4% to 4.6%. The West Midlands cooled most quickly, with rises easing from 16.2% to 10.2%.

House price inflation in the North East (26.2%), the North West (19.1%) and Yorkshire and the Humber (17.9%), remained substantially higher than in the rest of England. The East had the lowest annual rise at 0.5%.

The average price for first-time buyer was £125,271, up from 10% a year before. The average price overall nudged up from £160,937 to £161,306.

The ODPM house price survey was launched in September in response to criticism that a raft of house price data – produced by publicity-hungry lenders, surveyors and agents - might be distorting the decisions of buyers and sellers. The Treasury and the Bank of England backed calls for a definitive index.

Rivals have criticised the new survey because it works on data that is already two months old.

Ray Boulger, senior technical manager at mortgage broker Charcol, said the survey discrepancies were partly due to the fact the OPDM and Halifax and Nationwide base their figures on different stages of the mortgage process. The OPDM data is based on mortgage completions, while both Halifax and Nationwide refer to mortgage approvals.

The Nationwide price index also takes the average price of a three-bedroom semi-detached house as the benchmark, while the OPDM considers the price of all property in the UK. Because the top end of the property market has been rising more slowly than the lower end, this, he says, has led to the OPDM recording a smaller rise in house price inflation than that seen by some lenders.

'People need to look at the overall trend rather than just relying on the one figure, which may not give the whole picture,' said Boulger. 'In this case the trend for house price inflation is clearly still upward.'