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House price growth 'slowing'

House prices increased across all regions of the UK during the second quarter of 2007, but new research stresses that the rate of growth in the property market is slowing.The annual rate of house price growth increased from 9.5 per cent in the first quarter to 10.2 per cent in the second, according to the latest data from Nationwide.However the mortgage lender warned that the annual increase "masked" a slowdown in the quarterly pace of growth, which fell from 2.3 per cent to 2.1 per cent over the period.Nationwide's chief economist Fionnuala Earley said that relative weakness during the second quarter of 2006 had partly caused the growth in annual house price inflation."Even London and Northern Ireland, the two most buoyant regional markets, saw the quarterly pace of house price inflation slow," said Earley.In the capital house price growth slowed from 4.5 per cent in the first quarter of 2007, to 3.1 per cent in the second.Nonetheless the annual pace of growth jumped from 14.3 per cent to 15.7 per cent in the second quarter. The increase in house prices in London over the past 12 months subsequently continues to outstrip the average for England as a whole by 6.1 per cent.The average cost of a house in London is now £292,409, compared to a national UK average of £181,810.Meanwhile the annual rate of house price inflation jumped by at least five per cent in every UK region over the quarter, with five out of 13 areas reporting double-digit growth, said Nationwide.The release of the data follows last week's decision by the Bank of England to increase the benchmark interest rate to a six-year high of 5.75 per cent – a move made amid signs that the housing market remains robust.However the rate of property price growth varies between regions, with house price inflation in the south of the UK outpacing that in the north by 5.6 per cent.While London was found to be the most expensive place to buy a house, Nationwide's research found that property prices rose fastest in Northern Ireland - where they have increased by a mammoth 54 per cent over the past 12 months.But the annual rate of increase in the region recorded during the second quarter still fell short of the high of 57.6 per cent reported during the first quarter of the year."Recent growth rates appear unsustainable, and it would be healthy for the market to see some cooling," said Nationwide, warning that Northern Ireland was perhaps more vulnerable than other regions to the problem of affordability due to the fact that wages there remain below the UK average.

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