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Property price rises showing slowdown

Nationwide says property prices in the first quarter of this year rose at a slower pace than in the final quarter of last year.

The increase of 3.9 per cent in Q1 was a marked decline on the 6.7 per cent rise in Q4 last year.

However, Nationwide is maintaining its forecast for the year of 10 per cent growth, which would be substantially lower than the 25 per cent growth in the market last year.

It has reduced its prediction for the bank base rate level by the end of 2003 to close at the current 3.75 per cent from its earlier 4.5 per cent estimate.

Nationwide says if the Iraq conflict drags on, it could have a negative effect on confidence and the housing market.

It says the average house price during the first quarter was £119,938, up from £115,940 in the last quarter in 2002 but lower than Halifax&#39s average price of £127,040 for March.

Remortgaging continues to grow at a fast pace, according to Nationwide, with February seeing loans for remortgaging of £8.5bn, a 55 per cent increase on February 2002 when it stood at £4.68bn.

The society concludes that as 60 per cent of remortgage lending is used for home improvements, more homeowners are deciding to improve rather than move.

Group economist Alex Bannister says: “There has been much speculation about the housing market slowdown in recent months but our index suggests that house price growth remains buoyant although the trend over the last few months has moderated.”

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