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Friday, July 2, 1999 Published at 05:19 GMT 06:19 UK

Business: The Economy

House prices rise sharply

The spring usually brings out the housebuyers

House prices rose sharply in June, jumping by 1.8% compared with the previous month.

The Halifax house price survey, carried out by the UK's largest mortgage lender, shows that prices are rising at an annual rate of 6.6%

Sarah Pennells reports: "Prospective buyers have to act quickly"
The boom is concentrated in London and the south east, where a shortage of quality property was creating "localised hot-spots," according to the bank.

"But we see no evidence to suggest that the market is returning to a 1980s-style boom," said the Halifax. "Housing activity, although improving, remains well below the levels reached during the late 1980s."

The average house price was £76,877 in June, but the bank said that people were paying far less of their income on housing now that in the previous boom.

The average home-buyer was currently spending around 21% of gross income on mortgage repayments compared with a peak of 37% in the early 1990s.

That affordibility would moderate any house price boom.

The Halifax predicted that house prices would rise by 6% for the year as a whole.

The cuts in interest rates by the Bank of England have lowered the cost of house purchase sharply.

The Bank will be closely watching any further increases for signs of inflation.

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