Housing market 'robust'

Despite increasing speculation about its long-term fortunes, the UK housing market is showing signs of renewed strength, new figures indicate.

The latest data from the Halifax, the UK's largest lender, showed house prices in August grew by 1.3% - the same rate reported in July.

The bank said low unemployment and the end of the war in Iraq boosted confidence in the market, with estate agents reporting more interest from buyers.

However, the annual rate of increase was fractionally down on July's 19.2%, to 19.1% in August, with the average property now costing £133,908.

Renewed activity

The figures indicate the lull seen in the market between February and May, when confidence was knocked by the run-up to the Iraqi war, could be ending.

We are likely to see a more even pace of house price growth across the regions in 2004 than we have seen in recent years Martin Ellis, chief economist

According to Inland Revenue figures, the number of property transactions in England and Wales bounced back from a seasonally adjusted 103,000 in June to 115,000 in July, stopping the steady downward trend that had been in place since late last year.

Figures released by the Bank of England on Monday also indicate renewed activity by buyers.

The number of mortgage loans approved showed a 15% increase from a seasonally adjusted monthly average of 96,000 between February to May to an average of 110,000 in June and July, the data showed.

Estate agents saw an improvement in confidence in the market with reports of more buyer inquiries, greater competition for properties and signs that more buy-to-let investors are coming back into the market, the Halifax said.

First-time buyers

Martin Ellis, chief economist, said the housing market continued to be "underpinned by a highly favourable combination of factors".

Annual house price growth January: 24.9% February: 23% March: 23.4% April: 23.6% May: 22.7% June: 21.1% July: 19.2% August: 19.1% Source: Halifax

But he said the pace of growth should even out over the next year.

While the larger economic situation remained very favourable, the market could slow because house prices had become unaffordable for many first-time buyers.

This meant there would be less people entering the market, affecting demand for properties.

He said he expected the rate of house growth to "slow gradually over the remainder of 2003 and into 2004".

"The rapid increase in house prices in regions outside southern England over the past year or so make it increasingly difficult for first-time buyers, in particular, in these parts of the country to get a foot on the housing ladder.

"Accordingly, we are likely to see a more even pace of house price growth across the regions in 2004 than we have seen in recent years," he added.