House price inflation accelerates

Posted: 26 Apr 2007 11:28:17 GMT

House price rises picked up speed in April, according to new figures from Nationwide, indicating that the housing market is continuing to resist the effects of higher interest rates.

House price rises picked up speed in April, according to new figures from Nationwide, indicating that the housing market is continuing to resist the effects of higher interest rates.

Nationwide's figures showed that annual house price growth was up to 10.2 per cent from the March figure of 9.3 per cent, with the monthly figure increasing by 0.9 per cent compared with 0.5 per cent in March.

Nationwide chief economist Fionnuala Earley said the news had a clear implication for the Bank of England's monetary policy committee (MPC), which next meets to set interest rate policy on May 10th.

She said: "A rate rise on the MPC’s 10th anniversary looks like a certainty."

The MPC is already widely expected to raise rates next month following news that Consumer Prices Index inflation had exceeded its target range, obliging Bank of England governor Mervyn King to write an open letter to the chancellor outlining how the MPC planned to respond.

Ms Earley did, however, state that the underlying trend was for a gradual slowing of the market and warned against "too sharp" a hike in interest rates, which she believed would be "damaging" to the stability of the housing market.


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