House prices in the UK have risen by 26.2% over the past 12 months, according to the Nationwide building society, contradicting other reports that the market was stagnating. During March, property prices jumped by 1.9%, more than many analysts had expected.
Other recent surveys, notably by the Halifax bank, had pointed to a relatively abrupt slowdown.
Nationwide said its figures indicated that the underlying trend was for a gentle moderation in price growth.
"The key (factor) driving the slowdown this year will be people's pay and bonuses and we know they've come off a bit," said Alex Bannister, Nationwide's group economist.
Ups and downs
Mr Bannister said house prices were expected to grow by around 0.5% a month in the second half of this year, against an average of 1% a month in the first three months of 2003.
 People are a little bit jittery, a little bit uncertain about the future  Alex Bannister, Nationwide |
Nationwide based the prognosis on the fact that prices were up 3.9% during the first three months of this year, compared with an average leap of more than 6% in the previous few quarters. "There's a lot of uncertainty around at the moment," said Mr Bannister.
"We're seeing a lot of confidence measures decline, people are a little bit jittery, a little bit uncertain about the future."
Nationwide said it was sticking with its forecast of 10% house-price growth for 2003 as a whole.
But it acknowledged the Iraq war could have a negative effect on sentiment.
Job fears
Mr Bannister added that rises in council tax and National Insurance contributions could also slow the market, together with possible job cuts.
We expect the difficulties that first-time buyers face in entering the market... to increasingly curb demand |
"To date we've seen firms cutting back on investment but what they've not done is tend to cut jobs dramatically.
"We might begin to see that in the second half of the year if the US economy doesn't recover and we don't see some improvement in the world economy."
On Wednesday, the Halifax's latest housing survey noted that the recent boom had priced many first-time buyers out of the market.
Halifax has increased the amount of money people can borrow in relation to their income, to as high as six times a buyer's salary in some cases.
But the group defended the decision saying it applied only to customers who earned over �100,000 a year, had a 30% deposit and have already bought at least three houses with a faultless mortgage repayment record.
"There is probably more chance of winning the lottery than getting this six times income from us," said Shane O'Riordain, general manager at Halifax.
Regional variety
Nationwide's regional breakdown showed that expensive London has continued to grow strongly, despite repeated predictions of a bursting bubble.
Houses in the capital rose in price by 23% year on year in March, a modest acceleration on the pace set late last year.
But it continued to be outpaced by other regions, notably the North East, where prices jumped 36.5%.
Yorkshire, Humberside and the East Midlands also chalked up 30%-plus growth.
Only Scotland and Northern Ireland continued to under perform, recording relatively modest 12-14% annual growth.
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