Living in Britain gets expensive
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Living in Britain gets expensive

According to a Nationwide Building Society report, house prices in Britain have risen at their fastest monthly pace in recent times.

india Updated: Jan 31, 2006 13:49 IST

House prices in Britain rose at their fastest monthly pace in a year and a half in January, Nationwide Building Society said on Tuesday, in further evidence that the property market is picking up.

The mortgage lender said the average price of a home rose 1.4 per cent to 158,478 pounds, putting the year-on-year rise at 4.4 per cent, its fastest since last May.

"This is the strongest monthly rate of growth since July 2004 when it was 1.9 percent and the annual rate of house price inflation was more than 20 percent," said Fionnuala Earley, group economist at Nationwide.

"The annual rate of house price inflation in January 2006 is a more modest 4.4 per cent. Even so, this is a significant increase in price and confirms the strengthening trend we have seen since October."

The marked pick-up to an average house price of 158,478 pounds marked the 7th month of rises on the Nationwide's widely respected measure and followed signs that property market activity is set to accelerate further.

The Bank of England, which has left interest rates at 4.5 percent since last August, publishes data on December mortgage lending later on Tuesday.

The British Bankers' Association said the number of mortgage approvals in December was up a hefty 28 percent on the year while BoE policymakers noted at their last rate meeting that housing market indicators had been stronger than expected.

Still, Nationwide said there was little chance the recent housing market pick-up would persist given economic growth was set to be below the long-run average, unemployment was likely to rise and affordability remained stretched.

"It is unlikely that the market could absorb another strong rally of house price inflation," said Earley.

"In addition, there are already indications that consumers' appetite for further unsecured debt may be diminishing and that the amount of extra borrowing against property has slowed."

The lender has predicted house prices will rise by between 0 and 3 per cent in 2006.

First Published: Jan 31, 2006 13:29 IST