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Property growth 'slowing'

04/07/2007

House price growth is expected to continue slowing during the rest of 2007, Halifax has said.

Its monthly house price index shows growth of just 0.4 per cent in June, the second successive rise of less than 0.5 per cent. This strengthens the dampening trend seen in the residential property market in the second quarter.

Increased mortgage rates and declining real income, which the Office for National Statistics showed fell in the six months to March this year, are responsible for the slowdown, Halifax says.

Despite the clear end to last year's rapid growth the annual rate of change remains in double figures at 10.7 per cent and, as Halifax chief economist Martin Ellis points out, there is no danger of a crash at present.

"Solid economic fundamentals and a shortage of housing supply will… continue to support house prices," he commented.

The Halifax figures showed Northern Ireland as having experienced the biggest price increase in the last year, making it the most expensive part of the UK outside London and the south-east.

Meanwhile average prices in the north have advanced above the £150,000 mark, but despite this the north-south divide has widened following the strong performance of the southern regions in the last 12 months.

Today's figures from Halifax contradict those of the Nationwide house price index, which recorded a 1.1 per cent rise in June.

Howard Archer of research firm Global Insight said the discrepancy was down to the "volatile" nature of the market but confirmed an "overview" showed the trend was one of slowing growth.

"We continue to believe that house prices will lose buoyancy gradually over the coming months," he said.

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