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Friday, 4 October, 2002, 07:26 GMT 08:26 UK
House prices storm ahead
House price inflation graph
UK house prices surged by a further 4.3% last month, figures from mortgage giant Halifax said.

The rise means house prices have increased by 24.2% over the past year.

Halifax, the UK's biggest mortgage lender, said the continuing strength of the market had caused it to revise up to 24%, from 15%, its forecast for annual house price inflation at the end of 2002.

The move comes three days after building society Nationwide uprated by five percentage points, to 23%, its estimate for price growth this year.

Open in new window : UK property market
The house price boom

Onwards and upwards

Halifax group economist Martin Ellis said the market continued to be driven by low interest rates, falling unemployment and a shortage of properties for sale.

Average house prices
Greater London: 206,425
South East: 174,126
South West: 140,940
East Anglia: 119,932
West Midlands: 104,536
East Midlands: 103,653
Northern Ireland: 79,907
North West: 79,205
Wales:
76,359
Yorks & Humber: 71,334
Scotland:
68,648
North:
68,010

Source: Halifax

And he added that a change in outlook for the future direction of interest rates may have added to September's surge.

"Homebuyers are no longer expecting an imminent rise in rates with increasing speculation that the next move in interest rates may indeed be downwards," Mr Ellis said.

The bank said last month's strong annual figure could be explained in part by its comparison with September 2001, when the terror strikes on the US led to a 0.2% fall in UK house prices.

But the survey also showed prices growing strongly throughout the UK, with inflation picking up outside the south of England.

The East Midlands hosted the country's strongest housing market, with prices rising at an annual rate of 37.6% in the July to September period.

The average price of a house in both the West and East Midlands broke through the 100,000 barrier during this period, while the average price in Greater London rose above 200,000.

Slowdown on the way?

Mr Ellis added that Halifax still expected the housing market to slow gradually over the next year.

"The difficulties faced by first-time buyers in the south, in particular, will constrain demand and cause house price inflation to ease," he said.

The average house price was now 116,801, up from 111,968 in August, Halifax added.


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