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Thursday, September 2, 1999 Published at 14:02 GMT 15:02 UK

Business: The Economy

House price rises hit 10-year high

The Halifax is enjoying a boom time in the property market

UK house prices are rising at their fastest rate in nearly 10 years, according to a new report.

Property prices jumped 9.4% in the year to August, says the Halifax, the nation's biggest mortgage lender.

The figure has sparked renewed fears that inflation will take off.

The BBC's Chris Giles: "The desire to get on the housing ladder has forced up prices"
The annual rise in property prices was the strongest year-on-year gain since September 1989 - around the height of the property boom.

But Halifax chiefs said a similar boom was unlikely.

Annual house price rises peaked at a massive 34.4% in October 1988, partly thanks to a rush of first-time buyers trying to beat a deadline for a cut in tax relief on mortgages.

Those conditions were "notably absent in the current climate," the Halifax said.

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Over the summer, with interest rates low and property scarce, people's desire to get on the housing ladder has forced up prices.

Only two days ago, the Nationwide building society reported prices were rising at 9.8% a year.

And the Land Registry, which records all houses and flats sold in England and Wales, has reported a 8.3% annual rise.

The figures all increase the chances of a hike in interest rates by the Bank of England's Monetary Policy Committee, to cool the market down.

Market staying buoyant

But price rises are still not reaching the acceleration rate of the 1980s boom, which hit 20% a year.

The Halifax said the big fall in mortgage rates and the marked economic improvement since the spring would continue to underpin the market in the rest of the year and into 2000.

Its main house price index rose a seasonally-adjusted 1.1% in August, against an average of about 2% in recent months.

The average UK house cost £79,236 in August.

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