Every three months, the Halifax releases a comprehensive set of information and analysis about the state of the regional property markets. The level of detail is superb, with historical and comparative data for various property types in all regions of the UK, average house prices for all the major towns and cities, and locally sourced information regarding the factors that are driving trends in the different areas.

The monthly and quarterly house price indices and analysis of the latest trends can be found on the HBOS website: http://www.hbosplc.com/view/housepriceindex/housepriceindex.asp

The gains on the property market in the first 9 months of last year exceeded just about everybody's expectations. So as the days shortened and talk turned to fears of a global recession, particularly in light of the catastrophic day that was September 11th, it would have been no surprise if the year ended with a dramatic slump in the property market. But it wasn't to be that way.

The succession of cuts throughout the year and decisive action by the MPC in the wake of September 11th meant that the property market held up incredibly well. With mortgage rates cut to their lowest level since the mid 1950s and unemployment at low and falling levels, housing demand remained high despite the wider concerns.

The Halifax index shows that UK house prices actually increased by 2.6% in the fourth quarter of the year, a smaller rise than the 3.0% growth shown in the third quarter, but a sure sign of strength in a very difficult period. These gains actually took the average price to £96,149 and annual house price inflation up to 11.7% - the biggest annual increase in prices since 1988.

Although there were only two exceptions to the trend of increasing house price growth in 2001, there was a clear north/south divide in terms of the relative fortunes of the regional economies. While the south of England has been buoyed, by continuing rapid growth in the service sector, much of the Midlands and the North has seen economic growth constrained by the recession in manufacturing - a sector on which many regional economies are heavily reliant. This relative economic weakness resulted in lower house price inflation outside southern England.

The final quarter of the year saw all four regions in the south of England (Greater London, the South East, the South West and East Anglia) experience something of a slowdown in quarterly house price inflation. By contrast, the three northern English regions (North, Yorkshire & the Humber, and the North West) all recorded faster house price growth than in the previous quarter.

However, this wasn't enough to prevent the widening of the price gap when looked at on an annual basis. The South led the way during 2001, with prices rising most strongly in East Anglia (19.8%), Greater London (17.1%), the South West (16.2%) and the South East (15.8%). The gap between prices in Greater London and the national average increased by almost £15,700 over the year with the average price in London standing at £179,558 in the fourth quarter of 2001 compared with the UK average of £96,149. This gap of £83,409 is more than double the difference at the peak of the late 1980s boom (£41,436).

Most of the rest of the country also did fairly well, with double digit increases in the North (11.6%), Yorkshire & the Humber (12.1%) and the East Midlands (12.2%). The smallest price gains were in Northern Ireland (6.8%) and Scotland (5.2%).

Halifax expects that the housing market will weaken over the next 12 months, as the effects of the general economic slowdown filter through. Jobless totals are also likely to rise, which will have a further dampening effect on the property market. Nonetheless, continuing economic growth, low interest rates and housing affordability levels that are not stretched should support the housing market and the Halifax therefore predicts a 5% average overall increase for 2002 - a level which would represent a severe tailing off from this year's level of 12 percent.

Regionally, the south of England is likely to bear the brunt of the housing market slowdown. The ratio of prices to earnings is above its historical average in Greater London, the South East, the South West and East Anglia, suggesting that significant numbers of potential first-time buyers are finding it difficult to enter the market in these parts of the country. Greater difficulty in being able to purchase a property is likely to lower demand and constrain house price growth in southern England during 2002.

In addition, the prospect of significantly lower City bonuses early this year compared with the last two years, and the adverse effects of the recent sharp fall in equity prices, are also likely to contribute to a marked slowdown in house price inflation in Greater London where prices are expected to rise by only 2% in 2002. The continuing problems that the manufacturing sector is likely to face during much of this year as a result of the global economic slowdown will further constrain economic activity outside the south. This is likely to prevent any significant pick-up in house price inflation in these regions despite their more favourable housing affordability positions.

Therefore, while prices are expected to rise by more in the north compared with the south over the coming 12 months, price growth is not likely to accelerate in the north during the course of this year.

East Anglia

Quarterly Change: +4.5%  Annual Change: +19.8% Standardised Average Price:  £104,942 The average home buyer in East Anglia now spends around 15% of their gross annual income on mortgage payments compared to a peak of 38% in 1990.

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Period	East Anglia % change	UK % change
2001	15.4%	8.5%
Q1 2000	4.7%	3.4%
Q2 2000	3.0%	-0.1%
Q3 2000	0.7%	1.1%
Q4 2000	4.2%	1.0%
Q1 2001	3.4%	1.3%
Q2 2001	2.9%	4.3%
Q3 2001	7.6%	3.0%
Q4 2001	4.5%	2.6%

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Average price of semi-detatched property, Q4 2001:

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Post town/county	Average price
Cambridge	£171,300
Peterborough	£105,750
Ipswich	£84,250
Norwich	£105,600
Cambridgeshire	£112,450
Suffolk	£99,750
Norfolk	£97,400

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Commenting upon the housing market in East Anglia, Philip Adams, Regional Sales Manager for the Halifax, said: "House prices in the region again ncreased by more than the national average during the final quarter of 2001.

Norfolk and Suffolk have continued to remain buoyant with demand outstripping supply in many areas. The buy to let market has also continued to be very active, which in turn has meant that prices at the bottom of the market have been pushed up. Rising prices combined with the lack of 2 bedroomed properties available on the market is making it increasingly difficult for first time buyers to get on the housing ladder.

The housing market in Norwich continues to remain buoyant although increasing prices are forcing some customers to move further away from the city centre. There are a number of major new developments in the area and the redevelopment of the riverside in the city is proving extremely popular at the moment. A new state of the art hospital has just been completed on the outskirts of Norwich, which is expected to result in further development being planned for the area.

In Peterborough properties are selling quickly, when priced realistically, and the market continues to be very active. First time buyers are still able to buy in the area but if prices continue to rise they may well be priced out of the market.

Estate agents in Ipswich report that most properties are selling for the asking price and confidence in the market remains high. There is a new development underway at Ipswich Airport, which will provide a good selection of starter and second homes in the area.

The outlook for the housing market for the early part of 2002 is that it will continue to be active but may start slow down."

East Midlands

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Quarterly Change: +4.4%  Annual Change: +12.2% Standardised Average Price:  £79,167 The average home buyer in the East Midlands now spends 15% of their gross annual income on mortgage payments compared to a peak of almost 34% in 1990.

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Period	East Midlands % change	UK % change
2001	8.4%	8.5%
Q1 2000	2.4%	3.4%
Q2 2000	0.6%	-0.1%
Q3 2000	1.7%	1.1%
Q4 2000	1.3%	1.0%
Q1 2001	0.5%	1.3%
Q2 2001	3.5%	4.3%
Q3 2001	3.2%	3.0%
Q4 2001	4.4%	2.6%

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Average price of semi-detatched property, Q4 2001:

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POST-TOWN/COUNTY	Average price
Chesterfield	£56,500
Derby	£69,500
Leicester	£79,250
Lincoln	£66,250
Mansfield	£46,300
Northampton	£101,000
Nottingham	£76,600
Northamptonshire	£93,900
Leicestershire	£80,250
Derbyshire	£66,250
Nottinghamshire	£67,950
Lincolnshire	£67,900

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Commenting upon the housing market in the East Midlands, Philip Adams, Regional Sales Manager for the Halifax, said: "House prices in the region continued to rise during this quarter and Nottinghamshire, Leicestershire, Derbyshire and Rutland are all reporting levels of activity above the seasonal average.

Inner city developments are continuing to prove very popular in Derby and Nottingham. The Chesterfield area is also particularly buoyant at the moment with sales being made very quickly but supply is just about meeting demand.

Estate agents throughout the region report that the first time buyer market is particularly buoyant. Many first time buyers, specifically in the Grantham and Worksop areas are aiming their sights higher than the traditional terraced property and are buying semi-detached and detached houses. However, areas such as Leicester and Kettering are still seeing terraced properties continuing to sell very well.

New build developments are also continuing to sell well across the region, including three large new developments in the Worksop area. Prices in Worksop are slightly lower than in nearby Sheffield, which is enabling house hunters from Sheffield to take advantage of the competitive prices and move into the Worksop area.

The housing market in Lincoln has remained very active and there is high demand for large detached houses, which are in short supply. Victorian terraces have been selling very well as investment properties to let to the university students. Estate agents have also noticed an increase in the number of buyers from outside the area entering the market. The outlook for the housing market throughout the region remains healthy for the start of the year although it may be that it slows down slightly."

Greater London

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Quarterly Change: +2.2%  Annual Change: +17.1% Standardised Average Price:  £179,558 The average home buyer in Greater London now spends almost 17% of their gross annual income on mortgage payments compared to a peak of 41% in 1990.

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Period	Greater London % change	UK % change
2001	14.7%	8.5%
Q1 2000	4.2%	3.4%
Q2 2000	-2.3%	-0.1%
Q3 2000	3.0%	1.1%
Q4 2000	2.8%	1.0%
Q1 2001	3.1%	1.3%
Q2 2001	7.3%	4.3%
Q3 2001	3.5%	3.0%
Q4 2001	2.2%	2.6%

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Commenting upon the housing market in Greater London, David Thompson, Regional General Manager for the Halifax, said: "House prices in Greater London continue to grow but at a slower rate. House prices rose by 2.2% during the last three months, a slowdown of the market was expected and does not give cause for concern. The forecast for 2002 is moderate growth, significantly below the pace we have seen over the past twelve months.

The market in Central London for properties in excess of £1 million remains fragmented. Halifax has seen buoyant business levels with few signs of any impact from general City worries. However, this is not the case generally and it must be remembered that this market has been buoyant for a considerable period. Prices are slowing within this area although volumes of business continue to be steady, movement from equity-based investment into the less volatile property sector will be an influencing factor in this.

Activity in central areas, for properties under £1 million, has continued to be subdued just as in quarter three, although outlying boroughs such as Bexley, continue to offer better value than some of their more fashionable neighbours and consequently have seen strong demand throughout the period.

Riverside properties and fashionable Chelsea, Fulham & Putney continued to weather any concerns of a slowing market. The sheer popularity of these areas and the quality of properties in these areas is supporting the market.

In South West London there has been a genuine downturn in activity due to concerns around Heathrow and the airline industry where many job losses have been announced. This is also reflected in the Gatwick corridor where demand has been somewhat more subdued than in other parts.

East London has continued to show strong growth in sales with particular hotspots being Stratford and demand for some of the less fashionable East London areas is boosted by those looking for better value but with access to the City and Canary Wharf.

The "ripple effect" seen throughout the year is now in full flow. The cost of housing in many areas of the city has become prohibitive for average earners. Those areas, which may not have been considered previously, are now attracting buyers because of the relative value they offer. The outlook for 2002 is for more modest growth than seen in the last 12 months."

North of England

Quarterly Change: +5.4%  Annual Change: +11.6% Standardised Average Price: £61,782 The average homebuyer in the North now spends 13.5% of their gross annual income on mortgage payments compared to a peak of 28% in 1990.

Average price of semi-detatched property, Q4 2001:

Commenting upon the housing market in the North, Ian Corfield, Regional General Manager for the Halifax, said: "House prices increased significantly during the final quarter of 2001 and estate agents across the region are reporting that demand still remains high but there is a lack of property in many areas as demand outstrips supply.

In Newcastle, the market remains strong and demand continues to outstrip supply in many areas, particularly in the new city centre developments. Loft style apartments at Newcastle Quayside are also increasingly popular.

The areas in and around Jesmond and Gosforth are still popular with commuters but affordability is now becoming more of an issue, which has meant that Sandyford, Heaton and Benton are becoming 'hot spots'. Whitley Bay also continues to be in great demand, primarily because of the quality of the schools in the area.

In Sunderland the supply of semi-detached properties in the areas of Durham, Chester Le Street and Consett is not keeping pace with demand and in other areas there is a distinct lack of 'executive' style housing, which is creating difficulties for those trying to move up-market. Terraced properties are selling slowly and there has been an increase in owners letting these properties rather than selling them.

In the centre of Middlesbrough there is a high supply of terraced and ex-Local Authority housing but very little demand, which has meant that prices have fallen and investors are taking advantage of purchasing lower priced properties to rent out.

On Teeside, demand remains very high in Yarm, Acklam, Linthorpe and Ormesby as first-time buyers continue to aim above traditional terraced properties and families move to fall within the catchment areas of the most popular schools.

There are a number of new build developments in the region including Darlington, Hartlepool, Redcar and Stockton, which are all creating a lot of interest. The indications for the region for next year are that the housing market is expected to remain healthy and continue to grow."

North West of England

Quarterly Change: +2.3%  Annual Change: +7.6% Standardised Average Price:  £67,240 The average homebuyer in the North West now spends around 14% of their gross annual income on mortgage payments compared to a peak of 31% in 1990.

Average price of semi-detatched property, Q4 2001:

Commenting upon the housing market in the North West, Trevor Nicholson, Regional General Manager for the Halifax, said: "The housing market finished the year relatively buoyantly across the region, following on from the third quarter when prices remained unchanged. In many areas there are shortages of properties on the market and vendors are often reluctant to put their property on the market before they have found somewhere to move to. There is a particularly high demand for semi-detached properties priced between £80,000 and £120,000. Demand is high in any many areas throughout the region but this often outstrips supply.

There are a number of new developments in several areas of West Lancashire, including Southport, Wigan, Lymm, Ormskirk and Warrington, which are attracting a lot of interest. However, reservations for new build properties over £250,000 are proving slow, this is also proving to be the case in the city centres of Manchester and Liverpool. North Manchester is another area that is also popular with developers, particularly around Bolton and Oldham.

Property sales are continuing to move with offers being made quickly and sales being turned around within 6 to 8 weeks. There is still reduced demand across the region for lower priced terraced properties as first time buyers continue to set their sights higher. Affordability does not appear to be an issue for first time buyers apart from in the recognised hot spots and Bolton where prices are high. The outlook for the region for the early part of the year is that the housing market will remain healthy and there will be a further up-turn as we head towards Spring."

Northern Ireland

Quarterly Change: +2.4%  Annual Change: +6.8% Standardised Average Price:  £77,642 The average home buyer in Northern Ireland now spends almost 16% of their gross annual income on mortgage payments compared to a peak of 23% in the early 1990's.

Average price of semi-detatched property, Q4 2001:

Commenting upon the housing market in Northern Ireland, Pat Tierney, Area Sales Manager for the Halifax, said: "After a period of slowdown prices in the fourth quarter bounced back, house prices in Northern Ireland grew during the fourth quarter by 2.4%, this is compared to the UK average increase of 2.6%. House prices in the region are now 6.8% higher than they were 12 months ago. The story across the region is of steady sales volumes but with fewer properties at the top of the market. The outlook for 2002 is one of cautious optimism.

Mortgage activity is still strong across the Province, with the highest levels around Belfast, Ballymena and Lisburn. However, there are no particular "hot spots" at present, with the market showing a general steadiness across the board.

The tightening of the market on houses above £200,000 continues and local estate agents are reporting that it is taking longer to sell such properties. There is also a continuing view that some vendors at the top end continue to have unrealistic expectations on sale prices. The apartments market, especially in Belfast, is slow and some prospective prices are thought to be full.

There is a general view that supply at the moment outstrips demand but this could change quickly as we get into the New Year and towards the traditionally good Spring period. The stable political situation here will help overall confidence. There is a positive local view on economic prospects for the New Year with the low interest environment still prompting activity in the home-buying and re-mortgage markets.

Activity in the Northern Ireland housing market in the final quarter of 2001 has fluctuated throughout the quarter with low levels of transactions in October, increasing through November and now showing the usual seasonal downturn in December.

Prices having achieved a peak at the beginning of 2001 are now leveling out and have remained steady throughout the quarter. In Northern Ireland there is now an affordability problem for the first time buyers, while the market seems to be over-saturated with apartments in Belfast. At the lower end of the market, prices have appreciated and whilst this impacts on affordability it is not seen as a deterrent in making the house buying decision.

Supply of new properties coming to the market has remained on a par with the same period in 2000. Offers have also remained at the level of a year ago, but throughout the quarter these have not been converted to agreed sales, as the tendency to offer below the asking price continues. The steady movement of the market, stable political situation and low interest rates have underpinned growth in the region this year. The view for 2002 is one of growth tempered by caution over the economic outlook."

Scotland

Quarterly Change: +-0.8%  Annual Change: +5.2% Standardised Average Price:  £64,204 The average homebuyer in Scotland now spends almost 14% of their gross annual income on mortgage payments compared to a peak of 27% in 1990.

Average price of semi-detatched property, Q4 2001:

Commenting upon the housing market in Scotland, Duncan Movassaghi, Regional Sales Manager Scotland Central & West, for the Halifax, said: "In Glasgow there are set of extremes in terms of price and demand with Bearsden & Milngavie at the high end and Campbeltown at the lower end. West End remains a popular area continuing to attract good prices. The City Centre is proving very popular, with many new developments available. Concerns over job losses and the economy as a whole have brought caution and a sensible approach to the market rather than one of fears of a major slump. Location and fair pricing underpinned by a low interest rate environment are producing a steady market.

Edinburgh continues to be the jewel in the crown of city living in Scotland and prices are reflecting that. The high price of properties within the city has mirrored the city's recent economic growth and social standing within the whole of the UK. Edinburgh's image is now less provincial and more of a thriving city, second only to London as a centre for financial services. This inward investment has brought jobs to the city, which, in turn, have increased demand and driven prices up.

The popularity of the city has caused some affordability issues, predominantly within the first time buyer market. New entrants into the housing market are now looking further away from the city to commuter areas where "more for your money" is the order of the day, with surrounding areas benefiting.

In Perth, quality properties are selling well, with stone built being particularly strong. An example would be a stone built semi in the Craigie district of Perth sold two years ago for £90k which was recently resold for £135k.

In Dundee the picture is much the same as last quarter, with West End, Broughty Ferry and Monifieith the most buoyant areas. Supply continues to be an issue, with few new properties entering the market.

Elgin in the North of Scotland has lower numbers properties for sale at this time of year than would be expected. The area has two RAF bases and the current activity within Afghanistan is impacting on the area, with many Service personnel in action.

In other areas of the country, rural locations are noticeably quieter with the impact of the Foot and Mouth outbreak being felt on both farming and tourist industries. The housing market in Arbroath, Forfar and Brechin is particularly slow. In the Highlands and Islands the preferred choice of property is self-build. Islanders are increasingly looking to purchase plots on which to build.

The market is steady but buyers are looking at value for money properties, avoiding being over-stretched with payments and opting to commute rather than pay "city" prices. The view is that 2002 will see continued growth in house prices of around 5%."

South East of England

Quarterly Change: +2.6%  Annual Change: +15.0% Standardised Average Price: £150,201 The average homebuyer in the South East now spends 16.5% of their gross annual income on mortgage payments compared to a peak of almost 42% in 1990.

Average price of semi-detatched property, Q4 2001: