Return of confidence boosts property prices

House prices surged by 2% during November after a dip the previous month, Britain's biggest mortgage lender said today.

Halifax said property prices rose last month by their largest amount since September 2000 to bring annual house price inflation for the year to the end of November to 11.5%.

But Halifax cautioned that that the November rise marked a return of confidence from the lows that followed the September 11 attacks on the US rather than the start of a new surge in house prices.

The group said it expected prices to continue rising during the coming months but at a slower rate than has previously been seen.

The increase more than offsets the 0.5% fall in prices reported in October, and the average house price is now ?96,010.

Today's figures are broadly in line with ones reported by Nationwide earlier in the week, when the building society said property prices rose by 0.7% during November, bringing annual house price inflation to 12.8%.

The figures indicate that aggressive interest rate cuts from the Bank of England have propped up the consumer sector even if manufacturing is suffering badly.

House prices are a key barometer of economic activity in Britain where over two-thirds of people own their own property.

Prices therefore exert a strong influence on consumer confidence and spending.