Norfolks online estate agents. Est. 2007

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5 October 2007

More evidence of a slowdown in house prices has come from the UK's biggest mortgage lender, the Halifax.

Its latest monthly survey says prices fell by 0.6% in September, dragging down the annual rate of inflation from 11.4% in August to 10.7% last month.

Property prices are now responding to the five increases in interest rates which have come since mid-2006.

The Halifax calculates that the average residential property across the UK now costs £198,500.

The lender said the fact that prices had been rising and falling by small amounts each month this year reflected a subdued market.

"Overall, prices in the third quarter were 0.9% higher than in the previous quarter," said the Halifax's chief economist, Martin Ellis.

"This compares with increases of 2.3% in 2007 Q2 and 3.0% in 2007 Q1, marking a continuing steady downward trend in the rate of house price growth since the end of 2006."

Slowdown

The Halifax's research is now pointing in the same direction as other market surveys, such as those from its rival lender the Nationwide and from the Royal Institution of Chartered Surveyors. A further slowdown this autumn looks likely.

Earlier this month the Bank of England reported that the number of new mortgages being approved for house buying, a reliable leading indicator of market activity, were 9% lower in August than in the same month last year.

"Evidence is mounting that the housing market is now cooling markedly in the face of the financial market turmoil and the increasing affordability pressure on house buyers," said Howard Archer of Global Insight.

"Mortgage rates are rising further as a consequence of the liquidity crunch pushing up money market interest rates, while the Northern Rock crisis may hit confidence and increase consumers' wariness about buying a house."

The Halifax's survey points to the growing divergence between London and the rest of the country.

In the past three months the biggest price increases were in greater London, up by 2.3%.

Meanwhile the spectacular house price boom of the past two years in Northern Ireland has ground to a halt.

Prices there fell by 3.2% during the past three months, after growing by 8.2% in the previous quarter.


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