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Hopes rise for housing market recovery

The housing market could be heading for a recovery following August's interest rate cut, figures showed today.
The number of new loans approved for people buying a new property soared to 107,000 last month, the highest level since June 2004 and well up on the previous month's figure of 99,000, according to the Bank of England.

The figure is also around 40 per cent higher than the low of 76,000 that approvals dropped to in November last year.

Mortgage approvals are generally seen as a good indication of how the property market will perform several months down the line, and today's figures suggesting it could be heading for an upturn.

But the market remained subdued during September, with Nationwide Building Society reporting that house prices fell by 0.2 per cent during the month.

At the same time the rate of annual house price inflation continued to fall to just 1.8 per cent- its lowest level since since May 1996.

But Nationwide, which expects prices to increase by between 0 per cent and 2 during 2005, said the market remained fairly robust.

It said that as house price growth had softened, buyers had shown renewed interest in the market, while estate agents were continuing to report rises in the number of new inquiries and agreed sales.

The Bank of England also reported a rise in new mortgage lending during August, with net advances, which strip out redemptions and repayments, rising by £7.59 billion, slightly above the average for the previous six months.

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