Mini-boom sees house prices surgeASKING prices for properties have risen again, in defiance of growing concerns about their long-term sustainability, a report shows today. According to Rightmove, the property website, asking prices in England and Wales rose by 2 per cent in the month to the first week in May, after a 1.1 per cent rise the previous month. The figure “exceeded all expectations”, Rightmove said. It took the annual rate of house-price growth up to 5.9 per cent, from 4.1 per cent the previous month. House prices are enjoying what has been described as a “mini-boom” after a long period of stagnation. In the past four months, Rightmove’s figures show an average monthly price rise of 1.7 per cent, compared with close to zero growth in the preceding eight months. Question marks have been raised over whether the trend can continue. Last week the Bank of England signalled that the next move in interest rates is likely to be up, which could damage buyer expectations, although the Bank is not expected to move soon. Confidence in the market could be undermined further by comments last week by Mervyn King, the Bank’s Governor. He said: “Relative to average earnings, or incomes, or anything else you could look at, house prices do seem remarkably high.” Nonetheless, Rightmove’s figures suggest that the housing market will enjoy a much stronger year than had been predicted. It said that prices had only to rise by a further 1.3per cent over the rest of the year to chalk up 8 per cent growth in 2006, roughly double industry predictions in January. Price rises were strongest in northern England and the South East, it said. A survey of consumer confidence published today suggests that the housing market will stay healthy, boosted by fresh optimism in the South East. Peter Spencer, economic advisor to the Ernst & Young Item Club, which published the survey, said that a lack of new homes was keeping prices high.
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