House prices rise 0.2% amid signs of recovery
The housing market continues to show signs of recovery as prices rose 0.2% in March, according to Halifax house price index.
The increase follows a 0.5% rise in February and brings the quarterly change to 1.2% – and puts the average price of a UK home at £163,943.
Furthermore, house prices in the first three months of this year are 1.1% higher than a year earlier, marking the third consecutive rise in the annual measure.
Martin Ellis, housing economist at Halifax, said: "The housing market continues to show signs of modest improvement.
"Weak income growth and continuing below-trend economic growth are likely to remain significant constraints on housing demand during the remainder of this year. Overall, we expect to see a modest increase in UK house prices during 2013."
But property expert Henry Pryor warned of complacency ahead of the government's Help to Buy scheme that will come into effect in January next year.
"Chancellor George Osborne's Budget will stoke house prices with the controversial Help to Buy initiative, helping buyers make commitments the market would otherwise frustrate," he said. "Giving more money to buyers for a finite number of homes for sale just means that the price goes up.
"The Halifax figures mirror recent trends in asking prices and point clearly to the return of significant house price inflation in some parts of the country. Prices are not the result of straightforward supply and demand but of the availability of credit.
"Clearly those already on the housing ladder will be reassured to feel that their property is appreciating but this is a Ponzi-style scheme. Eventually the Government will stop buying the drinks and the housing hangover will begin."
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).