The Bank of England's base interest rate is likely to be increased tomorrow, suggests Halifax's monthly update, as house prices rose confidently again in April and there are no signs of a slowdown in the residential property market.
Value of houses rose 1.8% last month, says Halifax, pushing the annualised house price up by almost one-fifth (19.1%) since this time last year, and taking the average price to £154,304.
All the indications are house prices will not slow in the short-term, as Martin Ellis, chief economist at Halifax believes household finances are in good shape and the economy looks healthy alongside growing employment.
Private sector housing assets are calculated to be 3.2 times the value of total household debt at the end of 2003 compared with 2.7 times five or 10 years ago.
At the same time, however, Halifax appears to suggest personal wealth would have fallen much more had it not been for the huge rise in residential property prices over the last three years.
Comments presented by Ellis state the improvement in wealth to debt ratio is attributable to house prices, which in turn has offset the fall in financial wealth since 1999.
As a result of pressure on growing debt and house price inflation, the housing market is predicted to “ease” in the second half of 2004 as interest rates head towards 4.5%.IFAonline
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