London puts ‘gloss’ on January house price rise

London puts ‘gloss’ on January house price rise

Monday, January 29, 2007

House price inflation rose at its fastest pace in more than three years this month, driven by the London market, where demand outstripped supply.

In its monthly survey of the housing market, Hometrack said house prices rose by 0.4% on a monthly basis, for a 6.0% annual gain, its fastest annual growth rate since July 2003.

Richard Donnell, Hometrack's director of research, said: "Above average price growth in London has put a gloss on the headline rate of house price inflation."

"Average prices remained unchanged across 72% of the country in January," he added.

Hometrack said the effect of three interest rate rises by the Bank of England had yet to be seen. However, it said, “a lack of housing for sale means that there is likely to remain a steady upward pressure on house prices over 2007."

Mr Donnell said: "It is hard to identify any factors that would result in an increase in the supply of homes for sale in the short term. Controlling house price inflation at the moment is all about managing demand and interest rates are a blunt tool that are as much about impacting on market sentiment as affordability levels."

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