Property: House prices continue recovery

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House prices are almost back to the peak of the spring and early summer of 1989, the Halifax reported yesterday.

In its official 1997 fourth-quarter house bulletin, the Halifax said prices rose by 1.1 per cent during the last three months of 1997, similar to the rise in the previous quarter. Earlier this month, the banking group revealed that prices fell in December for the first time since last January, although it believed they would continue to rise for the rest of the year. In its monthly index, Halifax found the average price of a house dropped by 0.2 per cent - marking a slowdown of annual house price inflation to the lowest rate since June 1996. Inflation dropped from 6.1 per cent to 4.3 per cent.

Halifax said the figures did not mark an end to the recovery in house prices because the slight drop followed a sharp rise in November, when prices shot up 0.9 per cent. "We continue to believe that the modest recovery started in 1997 will continue into 1998 and that house prices will end the year around 5 per cent higher than their present level."

During 1997, prices rose by 6.3 per cent, up from 4.5 per cent in 1996. In the last quarter of the year, the average price was pounds 69,220, up from pounds 65,674 in the final three months of 1996. But the Halifax said the UK picture continued to hide regional variations, with prices rising fastest in the South.