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House prices rise strongly
More houses are being sold - especially in London |
House prices are rising at their fastest rate in a decade, according to a new survey by the Nationwide Building Society.
It says that the value of the average house increased by 13.3% to £74,954 in the year to November.
The figure was the highest since the third quarter of 1989, when prices were rising by 15.5%.
Prices rose by 1.9% in the month, compared an increase of 0.9% in October.
The news will put more pressure on the Bank of England to increase interest rates when it meets next week. The Bank has raised rates twice in the past three months.
Sushil Wadhwani, a member of the Bank's Monetary Policy Committee, said last week that rising house prices had made him take a more hawkish stance on inflation.
No unsustainable boom
But the UK's largest building society said there was not likely to be a repeat of the last boom.
It pointed out the number of houses sold in October, at 134,000, was still 20% below the level in the l980s.
And average first-time buyers are only spending 13% of their income on house prices, compared to more than 20% in the l980s..
"With the prospect of supply shortages easing and affordability remaining good, the current upbeat market conditions look sustainable," said David Parry of the Nationwide.
"Price growth is likely to continue to ripple out of London towards the commuter belt and the rest of the south east," he added.
Prices in the Midlands, the North, Scotland and Northern Ireland are lagging behind southern England so far.
But with housing starts for new construction up 8% and unemployment continuing to fall, it is likely that that housing boom will spread across the country.
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02 Nov 99 | Your Money |
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House prices 'booming' |
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08 Nov 99 | Business |
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Nationwide house price index |
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