Thursday, October 12, 2006
Strongest housing market for four years
Posted by David Smith at 09:30 AM
Category: Thoughts and responses

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RICS, which represents Britain's chartered surveyors, said house prices rose last month for the 11th consecutive month and are currently rising at their fastest pace for four years:

45.1 percent more Chartered Surveyors reported a rise than a fall in September, up from 34.9 percent in August, and more than double the long run average of 21 percent. RICS estate agents reported that price rises are being driven by a combination of would-be buyers returning to the market and the limited availability of property.

Price increases were again led by London and the South East, boosted by the a booming City economy, with rising investor confidence pushing the stock market to its highest level since May. Estate agents report that 'gazumping' is taking place amid prices in the capital rising at the fastest pace since January 2000.

RICS spokesman, Jeremy Leaf, said: "Greater economic activity has created a ripple effect in house prices across the country. With stocks of property low and buyer enquiries on the increase, sellers remain in poll position to benefit in the short term.

"Continuing house price rises will make it difficult for the Bank of England to leave the base interest rate level at 4.75 percent, unless the economy shows unexpected weakness. With affordability conditions for first-time buyers worsening, as price rises outstrip wages, higher interest rates will not help. However, a strong economy means that the housing market should see a soft landing in 2007."

Comments

The Government must tackle the issue of land, building land. It is imperative that the Government supply building land from its stock of greenfields.
What is the inflation rate if we were to remove house price inflation from the computations for inflation? Its absurd that we talk of increasing interest rates on account of ballooning house prices.

Posted by: Hitesh Damani at October 25, 2006 01:19 PM