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Wednesday, 3 April, 2002, 11:01 GMT 12:01 UK
UK house prices surge
House prices have continued to soar, but are set to slow later in the year, an influential sector survey has said.

House prices rose by 0.4% last month, according to the Halifax bank.

The average UK home was, at 102,227, 16.0% more expensive than in March 2001.

Prices have risen by nearly 9.0% in the last five months, said Halifax's head of group economics Gary Styles.

"The housing market has been very strong in recent months and the latest figures for March show further significant gains," Mr Styles said.

Market squeeze

But while March's 16.0% annual price rise figure was among the highest for a decade, it was lower than the 16.9% rate hit in February.

And Mr Styles warned that unemployment fears and weak salary rises would hold back the market over coming months.

The easing would provide some relief to first time buyers struggling against rising prices, and a shortage of properties to buy in some areas.

The slower growth in house prices should also ease pressure on the Bank of England to raise interest rates.

The Bank on Wednesday begins its latest meeting into interest rates.

Halifax, part of the HBOS group, now expects property prices to finish 2002 about 7% higher than they were in January, a two percentage point increase on the bank's original forecast.

Benefit fears

A separate report on Wednesday warned that reforms to unemployment benefit have increased the likelihood of repossession should the UK be hit by a "significant" economic downturn.

Measures introduced in 1995, extending the period laid-off homeowners must wait before receiving benefit help with mortgage interest payments, have saved the state hundreds of millions of pounds, the Council of Mortgage Lenders said.

But the reforms "are likely to lead to an increase in possessions should there be any significant rise in unemployment", CML researchers said.

The extra benefit delay, introduced in a drive to boost reliance on mortgage insurance, means poorer homeowners "are treated less favourably by the state than tenants", CML deputy director general Peter Williams said.

See also:

07 Mar 02 | Business
House prices shoot upwards
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