Tuesday, August 31, 1999 Published at 10:44 GMT 11:44 UK
Business: The Economy
House prices rise
Consumers will have to borrow more as house prices rise
The price of the average UK house rose 2.5% in August from July, the biggest single monthly increase since 1993, according to the latest monthly survey by Nationwide building society.
The average UK house cost £72,635 in August, compared with £71,232 in July.
Nationwide says that the increase in August was fuelled by growing consumer confidence, an increase in take-home pay as well as property shortages in London and elsewhere.
"Outside of London, supply shortages are far less problematic and as a result, prices in many Northern regions have only just returned to the levels reached at the peak of the eighties boom," David Parry, Nationwide divisional director said.
Parry added that the growth in house prices is nowhere as dramatic as in the late eighties when prices typically rose by 20% per year .
Nationwide now forecast that the housing market will enter a period of "more stable growth".
John Wrigglesworth, a former Bradford & Bingley director and now managing director of Wrigglesworth Consultancy, believes that "while it is not a 1980s boom, it is still a boom". His view is that building societies downplay their price forecasts, out of fear that that the government might raise rates.
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