House prices rise at fastest rate in six years

LONDON Fri Dec 6, 2013 10:10am GMT

A man walks past a row of houses in Chelsea in London August 13, 2013. REUTERS/Andrew Winning

A man walks past a row of houses in Chelsea in London August 13, 2013.

Credit: Reuters/Andrew Winning

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LONDON (Reuters) - British house prices rose at their fastest pace in more than six years in November but could slow as weak wage growth puts pressure on personal finances, mortgage lender Halifax said on Friday.

Average house prices in the three months to November were 7.7 percent higher than a year earlier.

That represented a speeding up from an annual rise of 6.9 percent in the three months to October and was the strongest increase since October 2007, Halifax said.

Britain's average house price remains 12 percent below a peak in August 2007, Halifax said

Demand for housing has been bolstered by Britain's Help to Buy and Funding for Lending programmes.

Amid concerns about a housing bubble, the Bank of England and the government last week decided to refocus the FLS scheme exclusively on business lending.

In month-on-month terms, prices rose 1.1 percent from October, more than economists had expected but slower than a revised 1.3 percent increase in October, Halifax said.

It was the 10th consecutive monthly increase in house prices as measured by Halifax, the longest such run since early 2003.

Economists in a Reuters poll had expected prices to rise by 0.6 percent on the month and by 7.2 percent in yearly terms.

Martin Ellis, an economist with Halifax, said growth in housing prices could be constrained by the failure of wages to keep pace with inflation.

"We are also seeing signs of a revival in housebuilding, which should help bring supply and demand into better balance and curb upward pressure on prices over the medium and longer terms," he said in a statement.

Last week, another leading mortgage lender Nationwide reported a 6.5 percent annual rise in house prices for November, the fastest rise by that measure since July 2010.

(Reporting by William Schomberg)

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