Property shortage fuels price rises
January 22, 2007 by admin
Filed under News, News-Mortgages
A new report says that house prices are rising due to a lack of property for sale on the market.
The Rightmove Price Index has found that prices in Britain have risen from an average of £221,751 in December, to £222,859 in January.
That means annual house price inflation is up to 13.5 per cent and the rise is being put down to a lack of housing.
The index says that housing stock is 18 per cent lower than it was at the same time last year, with Rightmove citing this as a major factor in the price rises.
“Where there are shortages of property, prices will keep increasing and properties will keep selling, in spite of the latest interest rate rise,” said Miles Shipside, Rightmove commercial director.
“The reason house prices are defying the gravity of a six-year high in interest rates is because the number of new households is growing by 50,000 a year, more than the supply of new build.”
The Bank of England has recently raised interest rates in a bid to bring the housing market under control, but Mr Shipside pointed out that this may be a risky strategy.
“Slowing property prices by raising interest rates several times in quick succession is not only incredibly painful for existing and potential homeowners’ mortgage payments, it’s a high-risk strategy for the economy given the possibility of rates going too high,” he said.
Rightmove has revealed that it expects to see property prices rise by six per cent this year.
