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House prices up 1.3% in December House prices 'slowest since 1996'
(30 minutes later)
UK house prices rose for the first time in four months during December, according to the UK's biggest mortgage lender, the Halifax. House prices in the UK grew last year at their slowest rate since 1996, according to the Halifax bank.
In its latest monthly survey, prices were up 1.3% in December compared with the previous month. The country's biggest mortgage lender said prices rose by 5.2% in 2007, taking the value of the average UK home to £197,039.
However, the annual rate of growth slowed to 5.2%. Prices went up by 1.3% in December, the Halifax said, the first time there has been a rise in the past four months.
A series of recent housing surveys have shown that the property market has slowed because of higher interest rates and higher energy costs. But overall the market has been going through a sharp slowdown under the impact of higher interest rates.
"This mixed pattern of monthly price rises and falls is a typical characteristic of a subdued market," said Martin Ellis, chief economist at the Halifax.
"Overall, the housing market continued to slow in the final quarter of 2007 with prices slightly lower than in the preceding quarter," he added.
Unaffordable
The lender predicts that house prices will slow down even more this coming year.
It expects them to be flat over the course of 2008, and expects the Bank of England will cut interest rates twice in the next 12 months in response to the slowdown in the wider economy.
Even though the Bank cut interest rates in December, the housing market has been responding to a series of previous rate rises that started in the summer of 2006.
These, combined with the increasing unaffordability of houses, has started to choke off demand in the market by keeping out many potential first time buyers.
The Halifax recently reported that there were just 300,000 first-time buyers last year, the lowest level since 1980.