Property market bounces back

THE UK property market defied the doom-mongers with house prices rising 1.1% in December - the highest monthly increase since September. However, lender Halifax, which produced the figures, latched on to a mere 0.1% rise for the last three months of the year.

'This was the smallest quarterly gain since 2000 quarter two and the second successive easing in quarterly house price growth, providing further evidence that house price inflation is slowing,' said Martin Ellis, Halifax chief economist.

The figures showed a 15.1% rise in house prices for 2004. However, most of the gain, 11.9%, came in the first half of the year followed by a more modest 2.8% rise since June. Halifax, the UK's largest mortgage lender, expects a 2% fall in values during 2005.

The figures also confirmed that the north-south property divide continued to close. The biggest price rises in the final quarter of 2004 were recorded in the North-West (3%) and Yorkshire and the Humber (1.2%). Prices in the South East fell 1.6% while London values fell 0.5%. Prices have been falling in the capital for six months.

However, the biggest decline, of 6.2%, was in Wales, which enjoyed one of the strongest property booms during 2002 and 2003.

For 2004 as a whole, the biggest price rises were in the North West (27%), the North (26%), Northern Ireland (24%) and Yorkshire and the Humber (22%). The smallest annual price gains were in Greater London (4%) and the South East (7%).

The differential between the average house price in the south and its equivalent in the north has fallen by £15,000 from a record £99,000 in early 2003 to £84,000 at the end of 2004.