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House prices down 1.1% in October, says Halifax

The housing market is softening, with a drop in house prices of 1.1 per cent in October, according to Halifax’s monthly house price index.

The index shows that the average house cost 160,857 in October down from 162,669 in September but up from 138,208 a year ago.

It also reveals that the annual rate of growth fell to 18.5 per cent in October, dropping under 20 per cent for the first time in six months.

Halifax says there are tentative signs that the ratio of house prices to earnings may have peaked at 5.63 in July while the recent interest rate inc-reases have raised mort-gage payments as a percentage of earnings from 14 per cent to 19 per cent.

Halifax predicts that house price growth will continue to moderate into 2005 as rate rises and firsttime buyer affordability constraints dampen demand.

Chief economist Martin Ellis says: “The housing market seems to be moving into a slowdown following the period of strong growth in 2003 and early 2004. The rises and falls we have seen in prices in recent months are part of the ebb and flow of the market as it finds a new base.”

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