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Halifax is forecasting 9% price increase this year

Average house prices in the UK increased by 1.5 per cent in January to £123,451 from £121,627 last December, according to latest research by the Halifax.

Its monthly house price index reveals an annual rise jump of 24.9 per cent from the same time last year when the average price was £98,840.

Halifax says this signifies that the housing market remains strong and that despite continuing price rises, affordability is manageable. It says loan payments in the last quarter of 2002 represented 15 per cent of gross earnings for a typical new borrower compared with an average of 18.1 per cent between 1983 and 2002.

Halifax is optimistic about the future of the UK housing market, predicting annual price growth of around 9 per cent this year.

But it says this is a marked slowdown when compared with the 26 per cent annual growth in the final quarter of last year. It puts down the downturn in the rate of increase to a gradual drop in demand.

Chief economist Martin Ellis says: “The housing market remains strong, with prices rising by 1.5 per cent in January. The factors that drove the market last year continue to be very much in place. Mortgage rates are at their lowest since the late 1950s. Transaction levels have also increased, particularly in the North of England.”

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