Interest rates 'not causing price drop'

Posted: 12 Apr 2007 11:27:37 GMT

Interest rate increases since the end of last year have failed to have a dampening effect on UK house prices according to the Royal Institute of Chartered Surveyors (Rics), which highlights continued buoyancy in the market despite base rate rises of late.

Interest rate increases since the end of last year have failed to have a dampening effect on UK house prices according to the Royal Institute of Chartered Surveyors (Rics), which highlights continued buoyancy in the market despite base rate rises of late.

The latest Rics UK housing market survey indicates that prices rose for the 17th consecutive month last month, during which the rate of increase also increased for the first time in five months. This is despite a base rate of 5.25 per cent, last raised in January.

In addition more than a quarter of chartered surveyors questioned reported an increase in house prices for March, up from under 25 per cent in February.

Rics spokesperson Jeremy Leaf highlights these trends as evidence of the market having absorbed recent rate rises but warns that future increases could prove damaging later in the year.

"The housing market has absorbed the initial interest rate barrage, but history tells us that further rate rises could knock confidence and activity significantly later in the year," said Mr Leaf.

"However, house prices are unlikely to fall in the short term," he added.

According to Rics the strongest house price growth was recorded in Northern Ireland and Scotland.


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