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Rate rises putting the lid on soaring house prices

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The recent interest rate rises could at last be having an effect on soaring house prices, according to Nationwide Building Society.

it said that prices rose by 0.4% in March, putting the average cost of a property at £177,083.

Annual house price inflation fell to 9.3% in March from 10.2% in February and the building society noted a general cooling off in mortgage approvals and buyer enquiries since the start of the year.

Fionnuala Earley, Nationwide’s chief economist, said: “While the annual rate of house price inflation has yo-yoed over the past few months, the underlying trend is clearly softening as interest rate rises take effect.

“Prices have risen by an average of 0.4% per month this year, compared with 1.1% in the last three months of 2006.”

Nationwide said that it was sticking with its prediction that prices would continue to rise this year, but not as quickly as they did in 2006.

Earley added: “The UK housing market will remain fairly firm in the short term, partly because of the momentum built up in the market that will take a few months to work through, but also because of supply constraints.

“Not only are insufficient numbers of homeowners putting their properties on the market, but levels of house building continue to undershoot the levels of demand.”

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