UK house prices up in January

UK house prices were up again in January despite a hike in interest rates by the Bank of England, according to a survey by mortgage lender Halifax. With the average price of a house now at £188,673, Halifax said that prices were up 1.3 percent in January. The price hike puts the annual rate of inflation in house prices at around 10 percent. The gains follow a slight decline in the price of houses in England and Wales in the fourth quarter of 2006, as reported by the Land Registry, which reported that house prices were up by 8.5 percent over the year as a whole.

Analysts at Halifax believe that the rise in house prices will slow in 2007, citing issues such as higher interest rates, slower economic growth, and real earnings growth that is in negative territory. The idea is that due to such conditions, those thinking of buying homes will be more careful. The analysts believe that the annual inflation house prices will drop to 4 percent by the end of the year.

One indications that the analysts could be correct in their assessment of the situation is that both inquiries about mortgages and new mortgage approvals dropped in December to their lowest level in a year.

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