Companies: HBOS   

House price inflation is increasing at its highest rate for over a year and is expected to continue rising, clearly good news for all those investing in the sector. The Halifax bank says its House Price Index shows an annual change of eight per cent, with a monthly increase of two per cent for April and 4.4 per cent for the first quarter of 2006.

This is supported by solid economic fundamentals – a strengthening economy, high levels of employment and low interest rates. However, Halifax warns that the ‘recent slight softening in the labour market and the continuing high level of house prices in relation to earnings should curb housing demand. Alongside higher utility and council tax bills, these factors should lead house price growth to moderate in [the second half of] 2006.’

Halifax Estate Agents says housing market activity has risen steadily in recent months, with March being the sixth successive month of rising sales and the number of sales is 15 per cent higher than this time last year. Scottish towns dominate the property hotspot map, with four out of the top ten price rises.

Rival mortgage provider Nationwide rains on Halifax’s parade, saying ‘April showers cooled house price growth’ as its own measure of inflation saw a deceleration last month to 0.1 per cent.

‘The annual rate of house price growth fell back below five per cent in April to 4.8 per cent,’ noted Nationwide economist Fionnuala Earley. ‘However, the underlying picture remains reasonably healthy as demand conditions have remained quite firm.’

Looking forward, the building society expects some month-to-month volatility in the house price numbers as the market adjusts to the economic conditions. Added to oil and utility inflation, Earley believes ‘this adds up to a mildly weakening, rather than accelerating, profile for house price growth for the rest of the year.’

HBOS	LSE	£4703.72m	87.00p	-4.30p
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