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Last Updated: Thursday, 4 May 2006, 09:13 GMT 10:13 UK
House prices show sharp increase
House prices rose by 2.0% in April and by 4.4% in the first four months of 2006, the Halifax bank has said.

April's price rise was considerably up on March's figure of 0.9%.

Halifax expects prices to rise further over the summer but then level off later in the year due to a "softening" of the labour market.

Meanwhile, the Bank of England (BOE) revealed that mortgage lending jumped by the biggest amount in two and a half years during March.

Mortgage lending rose by 9.3bn compared with a forecast of 8.6bn. Loans agreed for house purchase rose to 116,000 in March from 114,000 in February.

We expect the recent softening in the labour market and the continuing high level of house prices in relation to earnings to curb demand
Martin Ellis, Halifax

The strong showing by the UK housing market took many economists by surprise, particularly as the most recent data from the Nationwide had indicated that house price inflation was slowing.

Howard Archer, chief economist at Global Insight, described the results of the Halifax survey as a "real shock that will heighten concern that prices are gaining excessive upward momentum."

The BoE's Monetary Policy Committee will announce its UK interest rate decision later on Thursday.

It is widely expected to keep rates unchanged amid growing uncertainty about the future direction of the economy.

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The Halifax's calculations indicate the price of the average property in the UK rose from 175,441 in March to 178,992 in April.

The annual rate of UK house price inflation rose from 6.2% in March to 8% in April.

Despite the sharp average monthly rise, Halifax stuck to their recently expressed view that the market will cool later in the year.

"Whilst the market may remain relatively buoyant over the coming few months, we expect the recent softening in the labour market and the continuing high level of house prices in relation to earnings to curb demand," Martin Ellis, Halifax chief economist said.

Mr Ellis added that higher council tax and utility bills would also dampen down house price inflation.




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