UK house prices 'still rising'

Posted: 14 Sep 2006 12:35:37 GMT

House prices in the UK are continuing to accelerate, despite the interest rate rise last month.

The average price of a home in Britain is continuing to rise, despite last month's interest rate increase.

The Royal Institution of Chartered Surveyors (RICS) reports that house price growth accelerated last month, with price rises over the quarter to July at their highest rate since May 2004.

The organisation found that house prices rose in August 2006 for the fifth month in a row, suggesting that the quarter point rise in the cost of borrowing had done little to dampen the market, though surveyor confidence dipped slightly last month.

The RICS house prices balance rose to +35 from +30 in August, as more chartered surveyors reported a rise than a fall, boosted by positive economic growth, rising employment and increased buyer confidence.

According to RICS, enquiries from buyers are at their highest rate in nearly three years and the institution predicts further strengthening of the market in the near future, but warns that interest rate rises could affect property prices.

Ian Perry said: "Would-be buyers have been encouraged by a strong economic performance, but additional rises in interest rates before the end of the year could deter buyers as more pressure builds on personal finances. Further rises in house prices will prevent entry into the market."

The Bank of England's Monetary Policy Committee opted at its August rate-setting meeting to raise the base rate of interest in Britain to 4.75 per cent.

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