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House prices in England and Wales up 3% year on year, LSL index shows

But the data from the LSL Property Services/Acadametrics index shows that it is London prices that are propping up the market. Without the London factor house prices would be just £1,117 higher.

The index also shows that the average house price is now £230,078, an increase of 0.2% in March compared with the previous month. It means that the average increase last month was £532.

David Newnes, director of LSL Property Services, owner of Your Move and Reeds Rains estate agents, said that the fact that average prices have only fallen once in the last 16 months indicates that the housing market is now well clear of the storm clouds of the financial crisis. He pointed out life has become marginally easier for first time buyers and house sales are increasing, but added that there is still a long way to go to recovery.

‘Mortgage availability is poor by historic standards. There is an army of first time buyers trying to enter the housing market but they are being held back by tough mortgage criteria. Thankfully the government’s new initiatives inspire confidence, most notably the Help to Buy scheme, which should prove to be a real helping hand,’ he explained.

‘The key to the recovery of the housing market is more mortgages for first time buyers. The Funding for Lending scheme has gone some way to achieving that. It has eased the pressure on the market, allowing lenders to lower mortgage rates which have helped boost the first time buyer market. But it needs to be increased in scale if it is to have a more significant effect,’ he added.

But the research shows that improvements in mortgage availability, prices and sales have not been spread evenly across England and Wales and big regional disparities remain. The market in the south east, particularly London, is doing well but less affluent areas are struggling.

The north is showing less resilience, having experienced the largest fall in house prices, but areas in the south including Brighton, Surrey, Bristol and Cardiff, have seen prices soar. The fast rate of growth, seen in London, has pushed the annual rise in England and Wales, to 3%. But take London out of the equation and price growth is just 0.5%.

‘Since August the increase in average house prices at the national level has been remarkably consistent, edging upwards with monthly percentage increases ranging in a narrow band of between 0.1% and 0.5%,’ said Peter Williams, housing market specialist and chairman of Acadametrics.

‘But the average price at a national level is being supported, some would say artificially so, by the upward movement in house prices in the Greater London area. The annual rise in house prices in England Wales would be 0.5% if we excluded London from the national statistic. The disparity of 2.5% in the annual rate, between including London and not doing so, is the largest divergence we have recorded in any month since we began monitoring this effect in July 2005,’ he explained.

He estimates that comparing the number of sales in the first quarter of 2013 with the first quarter of 2012, activity in 2013 is 5% below the previous year but pointed out that in March 2012, sales were boosted by first time buyers looking to take advantage of the tax holiday on properties priced between £125,000 to £250,000.

‘So it would be incorrect to conclude that the housing market this year has fallen away from last year’s levels, as special factors accounted for the higher number of transactions in 2012. We will probably need to wait until the end of the next quarter to get a more accurate picture of this year’s market in terms of transactions compared with last year,’ said Williams.

‘On the face of it, transactions should rise modestly in 2013. Moreover, with Help to Buy support coming into play in 2014, what might have been a reduction in activity next year due to the timetabled ending of FLS may instead be replaced by continued modest growth,’ he added.

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