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House prices increased by 0.1% in May, the smallest monthly rise since January's 0.2% fall, the Halifax bank said today.
May's rise was markedly below the 2.0% increase recorded in April. The annual rate of price increase stands at 9.1%, the highest for 14 months, but the bank said this was expected and due to "technical factors." Specifically, the corresponding figures last year were weak and recent momentum in the housing market have caused house price inflation to pick up in early 2006.
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All houses, all buyers index (1983=100) |
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Index (seasonally adjusted) |
579.3 |
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Monthly change |
0.1% |
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Annual change |
9.1% |
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Standardised average price (seasonally adjusted) |
£178,997 |
There are signs that housing market activity may be beginning to level out. The number of mortgage approvals to fund house purchase fell in April for the second time in four months with the number of loans 11% below January's peak of 119,000, according to the Bank of England.
Martin Ellis, Chief Economist, said: "The pressures on the household sector resulting from higher unemployment and significantly higher household bills, together with the current high level of house prices in relation to earnings, are likely to constrain housing demand and curb house price growth and activity over the remainder of 2006."
"Sound fundamentals - a strengthening economy, high levels of employment and low interest rates – will, however, continue to support the housing market over the remainder of 2006, ensuring that the market remains in sound health."
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