Property price continues growth

Property prices continued to grow last month, keeping pace with the levels seen over the past year and offering little relief to potential buyers.

Halifax''s House Price Index reveals that property prices increased by 1.3 per cent in January, despite fears of another interest rate rise in the near future.

This rise brought the average cost of a home in Britain to £188,623, some 9.9 per cent more expensive than in the same month last year.

However Halifax does not expect this level of growth to continue too far into the future as higher interest rates start to feed through and the economy slows.

This will squeeze the incomes of many potential homebuyers and cause them to be more cautious when it comes to purchasing property.


Martin Ellis, chief economist at Halifax, said: "Accordingly, we predict that annual house price inflation will ease from ten per cent to four per cent by the end of 2007."

Figures from Nationwide appear to support Halifax''s predictions of a weaker property market in 2007. The bank''s chief economist Fionnuala Earley said she expects to see a weakening in demand as a result of stretched affordability this year.

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