House prices increase by 4.2%

UK house prices increased by 4.2% during Quarter 4 of 2006, according to the Halifax House Price Index.

The biggest price rises were in Northern Ireland (15.9%), Greater London (6.6%) and Wales (5.1%). The smallest increase was in the North (0.9%). Northern Ireland recorded a 53% increase in its average house prices in 2006; the biggest regional annual gain since 1988 (West Midlands: 60%).

Over the past ten years, Northern Ireland has achieved the strongest regional house price growth with the average house price up 265% from £53,865 in 1996 Quarter 4 to £196,874 in 2006 Quarter 4. Greater London (223%), South West (205%) and East Anglia (203%) have also recorded at least a three fold increase in house prices during the past decade.

The north/south house price divide at the end of 2006 was slightly wider than ten years earlier. The average property price in the south was 1.59 times higher than its counterpart in the north1 in 2006 Q4, compared with 1.43 times higher in 1996 Q4. The divide widened slightly in 2006 following successive narrowing in 2003, 2004 and 2005.

Commenting, Martin Ellis, chief economist, said: "All parts of the UK have seen substantial house price gains over the past decade with Northern Ireland recording the biggest gain since 1996, boosted by a 53% rise in 2006. London, the South West and East Anglia have also recorded at least a tripling in house prices in the last ten years.

A fundamentally sound economic background will underpin another healthy year for the housing market this year. High levels of employment, continuing economic growth, and a persistent lack of supply should ensure that house prices increase further. Higher interest rates, greater pressure on household finances and subdued real earnings growth will, however, curb housing demand. House price growth is set to ease as a result in all regions of the UK in 2007 with prices rising nationally by 4%."