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Housing market constricts

Britain's property scene remains "very tight" according to the latest house price index.Building society Halifax says that house prices rose 1.8 per cent in February, leaving annual inflation at 9.9 per cent unchanged for the third straight month.Last month's figures mean quarterly growth of 2.3 per cent has been experienced in the UK, which compares to 4.7 per cent in the previous three months.And Halifax predicts that a "modest slowdown" in Britain's once relentless housing market is emerging.Ahead of today's Bank of England interest rate decision and the chancellor's Budget later this month, the building society's chief economist points to new-buyer enquiries and mortgage approvals both slipping as evidence of the impending cooling period."A shortage of both new and second-hand properties available for sale has continued to push house prices up so far in 2007, particularly in London. However, there are some signs emerging that the increase in interest rates since last summer is dampening housing demand but this is yet to feed through to house prices," said Martin Ellis."Pressure on householders' finances due to negative real earnings growth, higher interest rates and above inflation council tax rises are likely to curb housing demand, resulting in a gradual slowdown in house price inflation later this year."The average house price in Britain is now valued at £192,233 on a seasonally-adjusted basis, Halifax says.

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