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Monday, 3 June, 2002, 13:26 GMT 14:26 UK
UK house prices set new record
Houses graphic
Expect more moderate price increases this year, Halifax says
UK house prices grew at their fastest ever monthly rate in May, but the property boom is set to cool later this year, according to the country's biggest mortgage lender Halifax.

In its closely-watched monthly house price survey, Halifax said UK property prices grew a record 4.2% in May from April.

The increase boosted the price of the average house in the UK to 107,152, 18.5% more than a year ago.

Halifax said the housing boom continues to be driven by low unemployment and interest rates, as well as a shortage of properties in key areas.

The latest figure is sharply higher than the Halifax's 0.7% estimate of house price growth in April.

That figure, which came in far below rival mortgage lender Nationwide's estimate of 3.4% growth, took some analysts by surprise.

First-timers squeezed out

Halifax said that while it now expects the property market bonanza to continue for longer than it had previously thought, house price inflation should moderate later this year.

"It is clear that house prices will not slow as quickly as we predicted earlier in the year," said Halifax group economist Martin Ellis.

"Probable interest rate increases in the next few months should ease the pace of future house price growth, however."

The Bank of England is widely expected to raise interest rates in the second half of the year in order to pre-empt possible increases in inflation as economic growth picks up.

Large monthly house price increases, seen as evidence of inflationary pressures, make an early increase in rates more likely.

The Halifax added that with many first-time buyers now priced out of the market, demand for property should ease in the coming months.


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30 May 02 | Business
04 Apr 02 | Business
03 Apr 02 | Business
30 Apr 02 | Business
03 May 02 | Business
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