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House prices return to upward trend in March

House prices in March were 5.2% higher on an annual basis. This was the largest increase in the annual rate of change – measured by the average for the latest three months against the same period a year earlier – since December 2007 (also 5.2%).

Prices are 9.1% above their trough in April 2009; an increase in the average price of £14,031 over this period. This follows a decline of 23% between August 2007 and April 2009. The average house price is now £168,521.

Commenting, Martin Ellis, Halifax housing economist, said:

"House prices increased by 1.1% in March, partly offsetting February’s 1.6% fall. This was the eighth rise in the past nine months, taking the average price to 9.1% above the low point reached last April.

Prices in the first three months of 2010 were 0.6% higher than in the final quarter of 2009. This was smaller than the 3.6% rise between the third and fourth quarters of 2009, suggesting a slowdown in the trend rate of house price growth. The return of the lowest stamp duty threshold to £125,000 affected housing demand at the end of 2009 and in early 2010. The bad weather in the first two months of this year also had an impact on demand at the start of this year.

There are signs that an increase in the number of properties available for sale is beginning to reduce the imbalance between supply and demand. This should help to contain the upward pressure on house prices."

Commentators welcomed the news from Halifax. David Whittaker, managing director of Mortgages For Business, said:

"Spring is in the air and with it comes renewed energy to the housing market as investors and house-hunters kick start their property searches The Labour party would have us believe this energy is down to their changes to the stamp duty rules but this hasn’t yet had a chance to kick in. The real reason for rise in prices is the lack of property available on the market – supply is outweighing demand and this is forcing prices up. This demand is being helped by the rise in mortgage availability as the economic climate stabilises further."

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