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THe BBC's Jonty Bloom
"The Halifax are expecting house prices to continue to rise this year"
 real 28k

Martin Ellis of the Halifax
"There are some signs that prices aren't rising as rapidly as last summer"
 real 28k

Thursday, 6 January, 2000, 01:17 GMT
House price inflation hits 13.8%

The UK housing market ended the year with a bang as prices rose by 2.6% in December, the second biggest monthly increase in 1999, according to the Halifax.

The figure means the annual rate of house price inflation jumped to 13.8% last month, up from 10.7% in November.

The rise means that the average price of a house in the UK (seasonally adjusted) is now 83,108, almost 10,000 higher than the average of 73,071 a year ago.

The rise increases the chances of another interest rate hike next week when the Bank of England's Monetary Policy Committee (MPC) meets.

The MPC cited the buoyant housing market as one of the reasons for increasing interest rates towards the end of last year.

Maurice Fitzpatrick, of chartered accountants Chantrey Vellacott. Chantrey Vellacott is forecasting a rate rise of between 0.25% and 0.5%.

Mr Fitzpatrick said: "The latest house price rise announced by the Halifax tends to reinforce the view we have already reached that an interest rate rise is virtually inevitable."

Buoyancy 'to ease'

The Halifax expects the market to remain relatively strong this year, but does not anticipate a boom similar to that of the late 1980's.

A spokesman said: "The continuing favourable housing affordability situation, together with further improvements in the underlying economic climate, should support a relatively strong housing market during 2000."

But he forecast that house price inflation was likely to ease later this year due to the effect of expected higher interest rates and the end of mortgage interest tax relief in April.

The bank predicts annual property price rises of 8% by the final quarter of 2000.

Boom 'exaggerated'

Meanwhile fears have been voiced that the house price surveys by the Halifax and Nationwide may exaggerate the property boom by concentrating too much on the South East.

Philippa Drew, marketing director of the Kensington Mortgage Company, which specialises in loans to the self-employed and those with poor credit records, said: "We are quite concerned that the current debate doesn't accurately reflect the true state of the housing market outside of pockets of prosperity in the South East.

"Recent interest rate rises have seriously dented confidence in many regions feeding through to significant job insecurity and stagnant house prices."

She said her company planned to launch its own quarterly property price survey designed to give a truer picture of the housing market outside the boom area.

She said it would be designed to track attitudes among groups such as the self-employed, contract workers, people with impaired credit and those approaching retirement.

It is expected to be biased towards the North.

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See also:
17 Dec 99 |  Business
House prices 'buoyant' in 2000
02 Dec 99 |  Business
UK house price boom is cooling
18 Dec 99 |  Your Money
Housing boom '20th century trend'

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