House prices rise with demand

Increased demand has meant that the rate of house price rise in October was the fastest in more than four years.

The Royal Institution of Chartered Surveyors (Rics) said its members had reported more demand for properties in October. The ration of homes sold to those on the market was at the lowest for two-and-a-half years.

The figures cover the period up to last week’s interest rate rise. This has already led to higher mortgage costs for new borrowers with some of the country’s biggest lenders, including HBOS and Nationwide.

However, Rics members remain confident about future house price rises. London still led the market in October, with City bonuses driving up prices. The "house price ripple" has spread throughout the UK.

Looking ahead, Rics said its members were expecting a slight fall in the number of sales. However, they did not expect the base rate increase to impact on house prices.

In fact, they were more confident about house price rises than at any time since March 2004, when the base rate stood at 4%.

Rics said a falling supply of property and strong economic conditions meant that the housing market was unlikely to be affected even in base rates rise again early in 2007.

"Even after last week's interest rate rise, surveyors are still confident that the housing market will remain buoyant," said Rics spokesman Ian Perry.

"London continues to see City bonuses inflate the housing market beyond the accessibility levels of most first-time buyers.

"The rest of nation is showing early signs of building up momentum as prices pick up in the Midlands and northern England."

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