House prices race into 2001

The UK housing market remains steady

The UK housing market has got off to a brisk start in 2001, despite fears over the global economy, figures from the country's largest building society show.

House prices rose 2.5% during January, and have grown 11.2% since a year earlier, a report from the Nationwide Building Society said.

This "vigorous" growth continued the pick-up in prices seen since autumn, the Nationwide's divisional planning director David Parry said.

And the market is expected to remain bouyant for the rest of 2001, with prices set to rise 7% over the year.

"This year looks set to settle down into a steady period of sustainable growth," Mr Parry said.

Outstripping inflation

A 7% rise, while lower than the 9.3% figure seen last year, would mean house prices are continuing to rise many times faster than the cost of living.

Prices of general goods rose 2.1% last year, the lowest annual rate since 1976, official figures show.

The estimate also places the Nationwide among the most bullish market watchers.

Most forecasts by economists and mortgage lenders so far predict UK house price growth of 4-6% this year.

First time buyers

While the rise comes against a backdrop of slowing global economic growth, with US interest rates cut on Wednesday for the second time in a month, Mr Parry said the figures highlighted resilience among UK housebuyers.

"The latest rise mirrors relatively bouyant consumer confidence," he said.

"It is likely that house-hunters, and in particular first time buyers, who took the decision to postpone purchasing last year are feeling more confidence and are now entering the market."

But the overall rise hid regional differences, warned the Nationwide, which is the UK's fourth largest mortgage lender.

While price rises in London and the Home Counties slowed in January, gains in the North, North West and West Midlands proved more impressive.

These differences were mirrored in a survey released on Tuesday by the Royal Institution of Chartered Surveyors, covering house prices in December.