Official: House prices push higher

ANNUAL gains in house prices have gathered pace, led by a bounce back in the London market, official figures show. Values rose at an annual rate of 12.6% in March, up from 10.5% in February.

The annual increase in London stepped up to 9.8% in March from 7.1% in February.

The Office of the Deputy Prime Minister, which launched its own house price index in 2003 in an attempt to clear up differing signals from property market surveys, also said the average price had risen to £183,346 from £179,491 a month before - a rise of 2.1%.

However, the ODPM warns against month-on-month comparisons as the figures do not take into account seasonal swings in demand.

The Government's latest property index merely adds to the confusion surrounding the health of the market. Surveys from lenders Halifax and Nationwide have pointed to a seesaw market in recent months while studies based on feedback from estate agents - such as those from property website Rightmove, research firm Hometrack and the National Association of Estate Agents - show steady price declines since last summer.

'The ODPM [figures] should not be taken as a renewed sign of strength in house prices,' said Howard Archer, economist at City research firm Global Insight. 'Rather it should be seen as further evidence that house prices are fluctuating around a broadly softening trend.'

In terms of the home countries, Wales continues to lead the way with annual house price gains stepping up from 18.1% in February to 22% in March. The increased from 15.5% to 16.1% in Scotland, from 11.5% to 15.8% in Northern Ireland and from 9.8% to 12% in England.

Within English regions, the pattern of recent years, with prices in the north catching up with the south, remained in force. The highest annual gains were in the North East (19.4%), North West (19.2%) and Yorkshire and the Humber (16.9%).

Yearly price gains in the East and West Midlands were both 14.9%, with 11.2% in the South West. The figure was less than 10% in the East and London and lowest in the South East, where inflation rose from 5% in February to 8.1% in March.