Published on : Sat, 03 Dec 2005 15:04GMT
by : Sadat Sayeed

LONDON - The UK’s biggest mortgage lender Halifax has said in its latest house price survey report that the house price inflation rose to 4.5 percent in the three months ending November. This represents the biggest rise over the last six months and is further evidence that the housing market has begun to wake up from its slumber.

House prices increased by 1.2 percent as compared to the situation in the last three months. House prices were flat in October. The annual rate of inflation rose from the 3.9 percent registered in October and Halifax said that even though this was way below the double-digit rises recorded last year, it was still a positive figure.

Halifax chief economist, Martin Ellis said as much, "The slowdown in UK economic growth over the past year and the historically high level of house prices relative to average earnings are, however, expected to curb the recent improvement in housing demand and prevent another sustained period of sharply rising property values."

He added that the high levels of and the strong earnings growth would continue to underpin the demand for housing. Halifax said that the average price of a home in Britain was a seasonally-adjusted £170,086.

But the survey said that the general slowdown in the UK economy would stall any further increases in house price inflation. The housing market has picked up significantly after the Bank of England cut the interest rates by a quarter point in August this year. Halifax Estate Agents said that sales in October were actually more than that of the same month last year.

Commenting on the Halifax data, Howard Archer, chief economist at Global Insight said, "The Halifax data will undoubtedly increase speculation that the recent clear pick up in housing market activity and buyer interest is starting to feed through to revive house prices." He added that if house prices were to jump up suddenly, buyers would lose interest, thereby limiting the increase in prices.