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Housing market cools off in December, says RICS

The rate of house price inflation has dropped off after Novembers rise in interest rates, latest research reveals.

A week after the Bank of England raised the base rate to 5.25% and on the same day inflation hits 3%, the Royal Institution of Chartered Surveyors says its found that while house prices rose for the fourteenth consecutive month in December, they eased back to August 2006 levels.

Its research found that just 37% more chartered surveyors reported a rise rather than a fall in house prices in December a reduction from 46.9% in November.

However, RICS says that house prices remain strong in London with few signs of the market easing up despite higher interest rates.

It adds that the recent interest rate increase has slightly dented surveyor confidence.

Ian Perry, spokesman for RICS, says: “Interest rate rises have started to cool the housing market and last weeks rise will have a further impact in the coming months, but the market remains strong.

“However, the rate rise will do nothing to aid home owners struggling with affordability conditions with more repossessions looming on the horizon.

As we move further into the new year, consumers will begin to tighten their belts as finances come under pressure but rising wages and employment will continue to boost the economy and RICS expects interest rates to finish at 5.5 by year end.

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