House party all set to keep on rockin'

House party all set to keep on rockin'

Britain's biggest mortgage lender this week predicted that the house price party will continue next year, in defiance of the doom-mongers.

The Halifax predicts the average UK house price will rise by 8% next year, though it said there was a possibility it was underestimating the increase because the "three pillars" that have underpinned the market - low interest rates, high employment and good affordability - are set to continue into 2004.

OK, 8%-plus isn't quite up there with the 14%-15% increase notched up this year, let alone 2002's bumper 26% rise, but it's a pretty amazing turnaround considering that just a few months ago all the talk was of a property market in the doldrums, with flat or falling prices and little hope of a bounce-back.

Halifax and its big rival, the Nationwide building society, often disagree about where the property market is going. But on this occasion they are singing from the same hymn sheet.

This week Nationwide said it believes UK prices will rise 9% next year, with most of this growth likely in the first half of 2004.

Most homeowners would probably be more than happy to see 8%-9% added to the value of their biggest asset during the next 12 months.

However, many would argue that UK averages are pretty meaningless because they mask dramatically differing.....continued below

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So who are the winners and losers? Halifax reckons that 2004 will once again be the "year of the north". It predicts prices in the north of England (which includes Northumberland, Cumbria, Tyne and Wear, Durham and Cleveland) will surge by 17% next year - and that's on top of the 33% increase that northern homeowners have typically enjoyed this year.

Yorkshire and Humberside, and the north-west (which includes Greater Manchester, Merseyside, Cheshire and Lancashire) are also set to do well, with property values set to rise by 12% and 11% respectively in the coming 12 months.

Halifax predicts prices will continue to motor onwards and upwards in Wales (14% rise predicted) and Scotland (12%).

By contrast, the south-east excluding London and the south-west are both set for annual price growth of just 3%, if the lender is to be believed.

There's better news for London homeowners - or worse news if you're one of the many looking to buy who thought prices in the capital couldn't go much higher. The Halifax reckons typical properties in London will see a further 8% added to their value in 2004 (the same as this year), and similar size increases are forecast for East Anglia, the west Midlands and Northern Ireland. The east Midlands is set for a 6% rise.

The Halifax warns that first-time buyers will continue to face difficulties getting a foothold on the housing ladder.

Traditionally these problems have been largely confined to London and the south-east, but the bank predicts that the runaway price growth seen in the north and much of the Midlands means that "the first-time buyer problem will extend over significant areas of the UK by the end of 2004".

Nationwide agrees, saying it reckons that first-time buyers "will remain an endangered species".