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Last Updated: Thursday, 9 November 2006, 08:31 GMT
October house prices 'gain 1.7%'
Semi-detached houses
The average house costs nearly 9% more than a year ago
UK house prices are still rising strongly, says the Halifax, the country's biggest mortgage lender.

In its latest survey, the Halifax reports that prices rose by 1.7% in October, pushing up the annual rate of house price inflation to 8.6%.

According to the Halifax, the average house price is now 184,593.

However, the lender predicts that the market may slow down in the coming months due to higher interest rates and the impact of bigger utility bills.

"There have been indications of a weakening in activity at earlier stages of the house-buying process, suggesting that house price inflation may soon begin to slow," said the Halifax's chief economist Martin Ellis.

Impending slow down?

As evidence for this the Halifax pointed to recent reports from the Royal Institution of Chartered Surveys and the House Builder's federation, which both showed a drop in enquiries from new buyers.

Graph of house prices

On the other hand, lenders are still approving an increasing number of mortgage deals for would-be buyers, traditionally the best indicator of short-term trends in the market.

Interest rates are expected to be pushed higher by the Bank of England today in an attempt to dampen down growing inflationary pressures in the economy.

In August, UK rates were increased for the first time in a year, from 4.5% to 4.75%.

That had no apparent effect on the residential property market with business continuing to be brisk.

The Bank of England is widely expected to rise rates again on Thursday, by a quarter of a percentage point to 5%.

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