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House prices continue to boom

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Nationwide Building Society has predicted that house price growth will remain firm in 2007, rising by a national average of 5%-8% over the year, ensuring that property remains a sound UK investment.

The accumulated momentum of strong demand from this year, and the perennial shortage of properties on the market, will bolster prices for the early part of next year, but this could well lead to affordability problems in the second half.

According to Nationwide, London and the South East will “drive” the market and should experience house price growth of 9%-10% on current predictions.

Nationwide group economist Fionnuala Earley said: “Momentum gathered in 2006 will flow into the early part 2007 and this will be supported by a buoyant economy, stable interest rates, strong saving and investment, and a continuing shortage in the housing supply.”

She continued: “We therefore expect to see a few months of double-digit house price inflation in the first half of the year.

“However, increasingly poor affordability and possible cutbacks in the amounts parents are willing to lend their children to help them buy a house, a form of saving and investment, could mean the growth rate will be back in single digits by the end of the year.”




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