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Tuesday, 5 June, 2001, 09:20 GMT 10:20 UK
House prices remain buoyant
House price rises in the last year
UK house prices are up 7.3% from the same time last year, according to the latest survey from mortgage bank Halifax.

The bank's figures, which are for May, showed the year-on-year rate of increase at its highest level since last September.

In May alone, prices rose 1.5%, down slightly from 1.8% in April.


If anybody needs any convincing that the domestic side of the economy is in good shape, this should provide it

Neil Parker
RBS
"The prospects for the housing market remain positive with prices set to continue rising over the remainder of 2001," said Halifax in a statement.

However, the bank did warn that slower economic growth could eventually put the brakes on accelerating house prices.

For the present, prices seem not to have been badly affected by the global economic slowdown, the fall in share prices or the outbreak of foot-and-mouth disease, said Halifax.

Consistent data

The findings by Halifax are roughly in line with figures released by Nationwide last week.

The UK building society found that May house prices were 7.7% higher year-on-year, and 0.8% up from the previous month.

Housing facts
House prices rose by 7.6% in England and Wales from March 2000-March 2001, according to the Land Registry
37% of chartered surveyors reported house price rises in England and Wales from January-April 2001, according to Royal Institution of Chartered Surveyors
The robust state of the housing market is expected to stay the hand of the Bank of England's Monetary Policy Committee as it meets on Tuesday and Wednesday to discuss interest rates.

"If anybody needs any convincing that the domestic side of the economy is in good shape, this should provide it," said Neil Parker, market strategist at RBS Financial Markets.

The general election on Thursday could also discourage the Bank from lowering interest rates - because it would want to avoid any charges of political bias.

Mr Parker added that the strength of domestic demand was offsetting the gloomy outlook overseas.

Consumer confidence

House prices are seen as a key economic indicator in the UK because so many people own homes.

Three previous cuts to interest rates this year - bringing them down to 5.25% - are credited with boosting the housing market by reducing the cost of mortgages.

The fall in UK unemployment to a 26-year low and steady increases in income have also bolstered consumer spending.

The increase in house prices during May was the fifth successive monthly gain.

Over the past three months, house prices have climbed 4.2%.

The average price of a home is now 90,707.

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