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Shortages see property prices rocketing by 20%

Housing prices have soared by over 20 per cent in the year up to July, fuelled by property shortgages, says Halifax.

The average UK house price leapt by 1.9 per cent last month to £111,823 from £109,738 in June and was 20.8 per cent up on the £92,569 reached in July last year, a significant rise from June&#39s 19.3 per cent.

Halifax&#39s latest housing price index shows says although housing transactions eased in June to 132,000 from 139,000 in May, the total remains around 3 per cent higher year on year. Throughout 2002, it says transactions have risen gradually mainly due to the absence of new properties on the market.

Shortages of property for sale are a major factor in driving up prices, especially in the South and London. The stock of unsold property with estate agents is at its lowest level for 20 years.

Mortgage approvals fell back from a record £19.7bn in May to £17.7bn in June but Halifax says the fall may have been caused by fewer trading days from the added bank holiday for the jubilee celebrations.

Head of group economics Gary Styles says: “Indicators of housing market activity while confirming a buoyant marketplace also show some signs of early slowing.

“We expect house price growth to slow in the coming months as more sluggish income growth, higher interest rates and lower buy-to-let volumes reduce overall demand levels in the market.”


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