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Slowdown predicted for US house prices

President George W. Bush's top economic adviser has warned that the rapid rise in house prices in the US will not continue indefinitely.
A number of UK based house builders have looked to their US markets over the past year to offset a marked slowdown in house price growth here.

A mild slowing in the buoyant US market is not expected to pose any danger to the country's overall economic health, Ben Bernanke, chairman of the Council of Economic Advisers, told Congress' Joint Economic Committee in Washington.

He said: 'House prices are unlikely to continue rising at their current rates.

'However, as reflected in many private-sector forecasts, a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near its potential next year.'

Private analysts expect growth to be around 3.25 per cent.

Bernanke repeated the Bush administration's belief that the double blows of hurricanes Katrina and Rita would reduce economic growth in the short term, but the US economy's longer-term growth path remains solid.

The average house price soared by 13.43 per cent during the 12 months up to June 30, the biggest gain in more than a quarter of a century, according to the Office of Federal Housing Enterprise

Oversight.

Nevada had the biggest increase, 28.13 per cent, followed by Arizona, 27.82pc; Hawaii, 25.92pc; California, 25.16pc, and Florida, 24.45pc.

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