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Monday, 2 October, 2000, 15:26 GMT 16:26 UK
Property prices edge higher
Neighbouring estate agents
Estate agents have seen their trade slow
The average price of a property in the UK rose by a seasonally adjusted 0.4% in September, according to the Nationwide Building Society.

This modest rise confirms a slowdown in the market which has seen the average property price rise just 2% during the past six months.

In the same period in 1999, price rises were running at an annual rate of 14%.

However the rapid increases seen during the second half of 1999 and first three months of 2000, mean that prices are still 10.2% higher than a year earlier. The average price in September was 80,672.

The slowdown was backed up by a fall in the number of house sales and mortgage approvals.

The Nationwide has revised its price rise forecast for the year down to 7%, from the 11% it predicted at the start of the year.

First time pain

It predicted a greater slowdown in the property market in London.

David Parry, from the Nationwide, said: "The latest figures confirm the trend we have seen in recent months: house price inflation continues to slow down from the peaks seen in the first half of the year.

"Between January and March this year prices rose by over 6% and if this had continued then the risk of a serious or sudden slowdown would have grown.

"Essentially the stable pattern of prices over the last five or six months reflects a return to a sensible market trend, with sustainable growth in sight."

Mr Parry said that the recent slowdown appeared to have been the result of a decline in the number of first-time buyers.

Buyers are wary

Although monthly mortgage payments are lower than at many times in the past, the absolute values are stretching first-time buyers' ability to raise large enough mortgages and deposits.

In London, for example, buyers of an average first-time property would typically need to earn 34,000 compared to 27,000 a year ago.

The Nationwide said that many people were wary of getting into negative equity, after the property crash of the 1980s.

This caution has led many prospective buyers to take a breather until the market stabilises.

In the last 50 years there has been only one period, 1990-1995, in which house prices have fallen.

The Nationwide said that the slowdown has ensured that house prices generally are not close to the overheated levels of the 1980s which partly prompted the five-year price fall.

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