Supply shortages sustain price rises

Posted: 23 Feb 2007 09:59:47 GMT

Supply shortages have boosted house prices for the 15th consecutive month despite slowing demand, the Royal Institution of Chartered Surveyors (Rics) has said

Supply shortages have boosted house prices for the 15th consecutive month despite slowing demand, the Royal Institution of Chartered Surveyors (Rics) has said.

The balance of surveyors reporting rising house prices slipped to 28 per cent in January, down from 36.6 per cent in December.

Despite the decline this remains well above the long-term average of 21 per cent and agents' property inventories fell to their lowest point since August 2004.

This was despite some buyer demand being constrained by the Bank of England's surprise announcement of the third interest rate rise in six months during January.

"Interest rate rises are having the desired impact of stabilising the market," said Rics spokesman Jeremy Leaf.

"The Bank of England's hawkish activity has deterred some buyers who have started to hesitate before taking the property ladder plunge.

"However, a strong economy provides a platform for modest house price rises particularly as would-be buyers face an ever diminishing choice of property on the market."

© Houseladder Ltd