House price rises suffer slowdown

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The Independent Online

House prices fell sharply in November, according to government figures yesterday that contradicted upbeat assessments by mortgage lenders and estate agents.

House prices fell sharply in November, according to government figures yesterday that contradicted upbeat assessments by mortgage lenders and estate agents.

The price of the average home dipped by 1.1 per cent on the month to drag the annual inflation rate down to 9.7 per cent from 12.1 per cent in October, said the Office of the Deputy Prime Minister.

The figures contrast with those from the Nationwide building society and the Halifax, which reported rises of 1.1 and 1.2 per cent respectively in November. Halifax said that the ODPM's monthly figure was not adjusted to take account of a quiet market in the run-up to Christmas, which explained the fall.

Analysts said that, despite the disparity in the monthly figures, most surveys showed annual house price inflation was slowing.

Halifax and Nationwide say inflation has fallen from more than 25 per cent at the start of 2003 to around 15 per cent as high prices squeezed out first-time buyers and rising taxes and interest rates deterred existing home owners from moving house.

Ed Stansfield, a property economist at Capital Economics, said the ODPM had a lower annual figure because it gave greater weight to price movements of high-cost properties. "We continue to expect prices to begin to fall during the second half of the year as the [0.5 per cent] increase in interest rates we expect dents confidence," he said.

A marked slowdown in house prices, if confirmed by other surveys, could put the brakes on an imminent hike in interest rates by the Bank of England. The Bank has forecast that house price inflation will slow to zero over the next 18 months but has been surprised by the recent strength of the market.

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