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House price growth 'slowed by rate hikes'

Three interest rate rises in five months are slowing Britain's housing market, building society Nationwide claims.Its monthly house price index shows the annual rate of house price growth falling into single figures, to 9.3 per cent in March from 10.2 per cent last month.Analysts believe that the Bank of England's increase in interest rates from 4.5 per cent to 5.25 per cent between August 2006 and January this year is responsible for the slowing market growth."While the annual rate of house price inflation has yo-yoed over the last few months, the underlying trend is clearly softening as interest rate rises take effect," Nationwide's chief economist Fionnuala Earley commented.Property pundits had expected affordability constraints to begin to slow house prices last autumn but were largely confounded when they continued increasing regardless.Now it seems that sustained demand will continue to have an impact by limiting the upward effects of the rate hikes on the market."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," Ms Earley predicted.The average UK house price is now £177,083, according to the Nationwide figures.

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