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Thursday, 3 May, 2001, 06:55 GMT 07:55 UK
Property prices surge
House sales signs across the UK
The average price of UK homes being bought and sold jumped by 1.7% in April, according to the Halifax mortgage bank.

The rise - giving an annualised rate of 19% - came as interest rate cuts injected fresh life into the property market.


The recent strengthening in housing demand apparent in the pick-up in both house prices and activity since the beginning of the year has been aided by the cuts in mortgage rates

Halifax
It was the fourth successive monthly increase in property prices according to the influential Halifax survey.

The rise also echoes reports of recent strong rises from the Nationwide building society.

The average price of a home in the UK is now 89,295, says the Halifax, which is 5.7% higher than a year earlier.

Interest rates

Halifax said that the recent rise in prices was mirrored by Inland Revenue figures showing a rise in the number of homes changing hands in the first three months of 2001, after nine months of falls.

"The recent strengthening in housing demand apparent in the pick-up in both house prices and activity since the beginning of the year has been aided by the cuts in mortgage rates," said the Halifax.

"Moreover, the increase in housing demand demonstrates that household confidence remains buoyant despite the deterioration in global economic growth and the fall in share prices since the start of 2001."

The Bank of England has cut interest rates twice this year, from 6% to 5.5%, after leaving them unchanged for a year.

The rate cuts have coincided with increased competition between mortgage lenders, which has meant housebuyers being given a range of cheaper borrowing options.

Nationwide survey

Interest rates were cut by the Bank of England because of signs that the UK economy was slowing down, and fears that there may be longer term knock-on effects from the

But Halifax says that prospects for the housing market over the remainder of this year "continue to be positive".

It says the interest rate cuts should ensure the UK economy remains in good shape, and so "ensure that housing demand remains robust".


We expected to see stronger lending in March... but the extent of new lending appears to have been more than just the usual seasonal upturn

Tim Sweeney, BBA
The Natiownide survey of April prices suggested prices rose at an annualised rate (the amount prices would rise if the rate stayed the same for 12 months) of 15% in March and 9% in April.

But because of the lack of movement in prices in the last nine months of 2000, the growth in property prices from a year earlier slowed to its lowest level for almost five years.

Also this week the British Bankers' Association revealed that new mortgage lending by major financial institutions surged to 7.65bn in March, 28% more than in February.

Tim Sweeney, BBA director general, said: "We expected to see stronger lending in March... but the extent of new lending appears to have been more than just the usual seasonal upturn.

"Customers are now being presented with more attractive financing options and this must be driving activity in the mortgage market."

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See also:

30 Apr 01 | Business
Housing market steady
03 Apr 01 | Business
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21 Feb 01 | Business
Halifax stokes mortgage war
20 Feb 01 | Business
Analysis: Cheaper mortgages for all?
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