LONDON (AFP) - British house prices fell by 1.1 percent last month, taking the annual growth rate below 20 percent for the first time in six months, a leading home-loan provider said.
The news came as the Bank of England prepared to announce its monthly decision on interest rates, with policymakers widely expected to leave interest rates unchanged at 4.75 percent for the third month in a row.
Many economists now think that official borrowing costs in Britain are at or near a peak following signs that five interest rate rises since November 2004 have begun to rein in runaway property prices and strong consumer spending.
House prices dropped by 1.1 percent in October and by 18.5 percent in the quarter to October from the same period of the previous year, according to the report from Halifax, part of the HBOS banking group.
On a quarterly basis, houses prices fell by 0.4 percent between July and October -- the first such fall since the last quarter of 2000.
"The housing market seems to be moving into a slowdown following the period of strong growth in 2003 and early 2004," said Halifax chief economist Martin Ellis.
"We expect house price growth to continue to moderate into 2005 as the Bank of England's rate increases and first time buyer affordability constraints dampen demand.
"Market fundamentals remain sound. Interest rates, while they have risen, seem likely to peak close to current levels," he said.
House prices are seen as an important indicator on the health of the overall economy in Britain as much of households' wealth is tied to their homes.
11/04/2004 - 09:55 GMT - AFP