Martin Ellis, group economist at Halifax, said: "UK house prices increased by 4.9 per cent in the first quarter and the annual rate accelerated from 11.7 per cent in the final quarter of 2001 to 16.2 per cent. Annual house price inflation accelerated in most regions in the first quarter with double digit rises in all nine
English regions and in Wales, but remains below this threshold in Scotland and Northern Ireland. Annual house price growth was highest in the South West (21.9 per cent) and East Anglia (20.8 per cent). The rate of inflation eased in Greater London and the South East suggesting that the high level of house prices in relation to average earnings in these regions is beginning to constrain demand, therefore curbing price growth.
"The south of England is likely to bear the brunt of the expected easing in UK house price growth later this year as more and more potential first-time buyers are priced out of the market, therefore blunting housing demand in this part of the country. Lower City bonuses and the fall in equity prices may also contribute to a marked slowdown in house price inflation in the south."