Darling: House prices will slow down

UK house price growth will fall in coming months, but the UK economy is sturdy enough to suffer the coming shocks to the economy, the chancellor of the exchequer told parliament yesterday.

Speaking a week before his début Budget, Alistair Darling said the economy was well placed to deal with current times of uncertainty.

"Debt levels are lower now than they were in the 1990s. Our interest rates are historically low and our economy is much more resilient than it was," he said.

"Government borrowing was 7.8 per cent of gross domestic product in 1993-94, whereas it was 2.3 per cent in 2006-07."

However, the chancellor admitted the housing market was set for contraction.

"It is true that house prices are slowing down, but on the back of many years when house prices were growing at 10 per cent, or even more in some parts of the country," he said.

"Although the housing market in this country will slow down, I believe that it is fundamentally strong."

Figures this week from Halifax show house prices fell 0.3 per cent in February and annual house price growth slid to 4.2 per cent.

The mortgage lender now predicts flat growth over the next 12 months.