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Tuesday, 3 April, 2001, 10:00 GMT 11:00 UK
Foot-and-mouth hits house prices

The foot-and-mouth crisis is starting to affect house prices in rural areas as homebuyers stear clear of the countryside, according to a survey.

Nationwide Building Society estimates that the foot-and-mouth crisis could knock up to 0.5% off annual house price inflation across the UK in 2001.

But the housing market is unlikely to suffer any lasting effect, it adds.

Nationwide's latest monthly house price survey showed a 1.4% rise in average prices during March - an annualised rate of 17%.

Downward trend

Over the first three months of 2001 the average price paid for a home rose 3%, which if maintained would give a 12% rise in prices during the year.

Price rises appear to have picked up since the cut in UK interest rates in February and the subsequent cuts in mortgage rates.

But despite the rise in March, the amount by which prices increased over the previous year slipped to 7.2% from 9.3%, because of the slowdown in price rises during the second half of 2000.

"We believe the housing market remains in line with our forecast of 7% by the end of 2001," said David Parry, Nationwide's divisional director of planning.

Nationwide said rural home buyers were likely to have postponed their house-hunting in order to avoid making non-essential journeys into the countryside.

But demand remained strong in urban areas on the back of falling mortgage rates and record numbers of people in work.

London slowdown

After Scotland, London had the lowest increase in property prices during the year from March 2000 to March 2001, with recent stock market falls one of the reasons given.

Annual house price inflation in London slowed sharply in the first quarter of 2001 to 5.6%, in sharp contrast to the 25.5% increase in the same period in 2000, according to the survey.

Haringey, Waltham Forest and Camden were the areas of London where house prices increased the most, by between 15% and 20%.

The survey also showed that there were big differences between house prices in the North and South of England, and also wide variations within individual areas.

This was most pronounced in London, where prices in Kensington and Chelsea were 3.5 times higher than in Barking and Dagenham.

Meanwhile, typical prices in Newcastle-upon-Tyne, the most expensive area in the north, are around a fifth of the typical price paid in Kensington and Chelsea.

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See also:

06 Mar 01 | Business
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28 Feb 01 | Business
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