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Friday, 3 May, 2002, 06:37 GMT 07:37 UK
UK house prices up again
The average UK house now costs 102,851
UK house prices rose by another 0.7% last month from March, but the property boom is set to cool later this year, according to the Halifax bank.

In its closely-watched monthly house price survey, the country's biggest mortgage lender said UK property prices posted "further significant gains" in April, with the average house worth 15.1% more than it was one year earlier.

But the Halifax reiterated its earlier prediction that job losses and lower income growth will cool demand for property, leading to more moderate price increases later this year.

"Our economic assessment is that house price inflation will ease over the course of this year as weaker income growth and higher unemployment reduces consumer confidence," said Halifax head of group economics Gary Styles.

Price discrepancy

Halifax's estimate of April price growth, at 0.7%, is significantly below the record 3.4% increase reported earlier this week by rival mortgage lender Nationwide.

But the April growth figure tops Halifax's 0.4% estimate for March.

Average UK house prices have soared over in recent months, fuelled by low borrowing costs, high levels of employment, and a shortage of properties in key areas.

Analysts say the sustained strength of the UK property market, seen as a evidence of inflationary pressures, makes it more likely that the Bank of England will raise interest rates later this year.

The Bank cut rates to their current 37-year low of 4% last year in an attempt to stave off recession, but is widely forecast to raise the cost of borrowing in the second half of 2002.

Squeezed

The average UK house now costs 102,851, making it difficult for many first-time buyers to purchase property, the Halifax said.

"We expect that an easing in house price inflation in 2002, particularly in London, will provide some welcome help for this important buyer group," Mr Styles said.

The Halifax's forecast that price growth will moderate tallies with other mortgage lenders' predictions of a soft landing for the property market.

The major banks and building societies agree that an early 1990s-style house price crash, leaving homeowners burdened with mortgages worth more than their houses, is unlikely.

See also:

04 Apr 02 | Business
Rate rise fears as Bank meets
03 Apr 02 | Business
UK house prices surge
30 Apr 02 | Business
Housing market sees 'record growth'
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