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House price inflation may have started to ease

The increase in house pricing in Britain may have started to ease, according to a survey done by Halifax, the nation’s largest mortgage lender.

The survey reveals prices across the UK in the three months to the end of August rose by 9.7% - significantly down from 10.2% in July. Prices in the three months between June and August were 3% higher than in the previous quarter, down from 3.5% in the previous month.

This could be due to more homes coming onto the market; the number of new homes completed in England increased by 6% between the first six months of 2014 and the total during April-June 2014 was 7% higher than this time last year. If this continues, it could also help to bring demand and supply into better balance. There are, however, signs that material and labour shortages will limit the amount of new houses being built, a least in the short term.

Martin Ellis, housing economist, said:
"Housing demand is supported by continuing economic recovery, growth in employment, improving consumer confidence and low mortgage rates. Nonetheless, earnings growth that remains below consumer price inflation, and the prospect of an interest rate rise at some point over the coming months, are likely to curb demand.
There are some signs of an improvement in housing supply, both in terms of more second-hand properties coming onto the market and increased numbers of new homes. These trends, if sustained, should help to improve the balance between supply and demand, contributing to an easing in the pace of house price growth."

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