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Last Updated: Thursday, 29 September 2005, 08:18 GMT 09:18 UK
House prices 'continue to slow'
Homebuyers look at house
The property market remains weak, says the Nationwide
Annual house price growth is continuing to slow, according to the Nationwide.

Prices rose by just 1.8% during the 12 months to September - the lowest increase since May 1996, and a further decline on August's 2.3% growth.

But the building society said August's quarter-point interest rate cut to 4.5% might now be boosting the market.

Nationwide said house prices fell by 0.2% during September, the same as in August, with the average cost of a UK property now standing at 156,517.

House prices are likely to remain relatively flat for an extended period
Howard Archer, Global Insight

'Smooth slowdown'

House price growth in the three months to September was up 2.7% compared to the same three months a year ago.

"Estate agents have consistently reported increased buyer interest over the last few months, which should help to support the market going forward," said Fionnuala Earley, group economist at Nationwide.

"Rather than seeing a rapid and significant correction in house prices as predicted by some, we are more likely to see a continuing smooth slowdown as lower price inflation attracts more demand, and thus liquidity, into the market."

Nationwide has predicted the market will remain flat for the rest of the year, with prices ending 2005 at the same level as they began it, or at most rising by 2%.

Howard Archer, chief UK economist at economic forecasters Global Insight, sees little change in prices for quite some time.

"House prices are likely to remain relatively flat for an extended period," Mr Archer said.

Regional variations

All regions of the UK experienced a slowdown in growth, although price rises in the north continue to be higher than in the south.

Northern Ireland led the way with annual house price inflation of 11.4%, while in Scotland prices have risen by 7.1% in the past 12 months.

The north-west and north of England saw house price inflation of 4.8% and 2.6% respectively.

The south-east and London saw prices either edge forwards by less than 1% or actually fall.

The phenomenon of house price inflation in the north far outstripping that seen in the south of England has been repeated month in, month out since late 2003.

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