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Growth in jobs fuels house rise

House prices remained buoyant in August, increasing by 1.3 per cent following a fall of 1.4 per cent in July according to the Halifax house price index.

The annual rate of house inflation stands at 19.1 per cent, pushing the national average price of a home up to £133,908.

Mortgage payments for a typical new borrower are 14.5 per cent of gross income, the lowest proportion seen since the early 1980s.

Halifax chief economist Martin Ellis says the increased number of homes being sold can be accredited to a record level of employment in the second quarter.

The Office for National Statistics reported a rise of 63,000 people in employment over the past three months with unemployment benefit claims falling by 8,800 in July to 939,200.

Ellis says confidence has been boosted since the Iraqi conflict, with more people returning to the market, particularly for buy-to-let mortgages.

Bank of England data show that mortgage loan approvals rose by 15 per cent to a seasonally adjusted monthly average of 110,000 in June and July from 96,000 between February and May.

But the Halifax expects growth to slow in the next few months. Ellis says: “We expect the rate of house price growth to slow gradually over the remainder of 2003 and into 2004 as the rapid increase in house prices in the region outside Southern England over the past year or so make it increasingly difficult for first-time buyers to get a foot on the ladder.”

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