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HBOS: property prices will rise only 4% in 2007

13 December 2006
House prices in the UK will rise by four per cent in 2007, less than half this year's rate of growth, according to the Halifax Bank of Scotland (HBOS).

A four per cent rate of growth would be the lowest for over a decade.

The bank believes growth rates will fall from this year's rate of nine per cent under the impetus of higher interest rates – a further rate hike to 5.25 per cent is widely predicted in the coming months – and higher living costs.

But the Royal Institute of Chartered Surveyors (Rics) has also released figures which are less optimistic, predicting a house price growth rate of seven per cent in 2007, with demand continuing to outstrip supply and rising numbers of repossessions as homeowners struggle to keep up with mortgage repayments.

The outlook for first-time buyers hoping to get onto the property ladder, meanwhile, will be one of "increasing gloom", Rics claims.

Commentators have remarked that the Rics growth rate figures may be more plausible, pointing out that HBOS had to revise its predictions after forecasting a three per cent growth rate for house prices in 2006.

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