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House price growth continues into 2007

Britain's house price growth continued undeterred by interest rate rises in January, government figures show.Statistics released today by the Department for Communities and Local Government (DCLG) reveal that the average UK house price stood at £205,286 in January, up from the £201,090 reported for December last year.Britain's annual house price growth accelerated from 9.9 per cent in December to 10.9 per cent one month later.The increase comes despite three interest rate rises in five months from the Bank of England, including the widely unexpected hike to the current 5.25 per cent rate in January.January's figures reflect unofficial property indicators, which have subsequently noted dampened price growth in February.These suggested that the housing market is beginning a slowdown, but Howard Archer of research firm Global Insight believes today's DCLG release undermines these claims."The overall impression that emerges is that house price increases currently remain pretty elevated, notwithstanding hints in some surveys that they could be beginning to level off," Mr Archer said.Increasing his firm's prediction for overall 2007 growth from five to six per cent to six to seven per cent, Mr Archer said that the "gradual" slowdown would eventually take place."We suspect that over time the growing affordability pressures resulting from higher interest rates, only moderate real disposable income growth and elevated house prices will increasingly feed through to squeeze buyers out of the market and curb house price rises," he explained.

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