Rate rise can't halt house prices by Finance News Bulletin

Published: 23/05/07

News Companies & markets Investing authority portfolio Campaigns Mortgages & homesMortgage featuresInsurance customer advice Broadband & phones Retirement Saving & banking Credit & loans Small business Tax & wills communication boards Money blog Tools & calculators inquire an expert Guides Compare & buyA property shortage is driving up home prices in spite of the recent rises in interest rates, a report warns today

TAKE PART IN OUR SURVEY put on't miss your chance to tell us what you think of This is Money and help form our futureA ONE-MINUTE MAKEOVER If you only have one miniature to learn how to sort your finances, forget the rest and read this>> Our 8-step planSome estate agents maintain to have effectively 'sold out' - leaving buyers resorting to unorthodox events to find a homeMany are printing leaflets announcing themselves as buyers and putting them through doors of properties they are interested in

Others are resorting to gazumpingThe tactics are at odds with efforts by the store of England to sluggish the housing market boom by pushing up interest rates three era since AugustA study by the estate agent website Rightmove claims the average possessions asking price rose 05 per cent in the past month to £222,859

The figure is up 135% in the past yearRightmove profitable director Miles Shipside said: 'store levels per estate agent at the start of the year have not been this low for three years, and are 18% lower than at this time last year'Where there are shortages of possessions, prices will keep increasing and properties will keep selling, in malice of the latest interest rate rise

'The average figure of properties on each manager's books is just below 52, the lowest figure since the beginning of 2004 The company claims the two interest rate rises late last year did not stop insist and that asking prices have risen by around £9,000 since AugustThe average asking prices of flats and terraced homes each rose by over £4,000 during the last three months By contrast, detached properties fell by almost £5,000

Mr Shipside said interest rate rises are a 'blunt instrument' to tackle price rises and said the only effectual action would be to build new homes to please demand'The reason house prices are defying the gravity of a six-year far above the ground in interest rates is because the figure of new households is growing by 50,000 a year, more than the supply of novel build,' he saidDon't miss our mortgage tips - five habits to beat the speed rise - and check your outgoings with our calculators

A flat the size of a snooker bench has gone on the marketplace in London for £170,000 The former cleaner's storeroom in Cadogan Place, Chelsea, is supposed to be able to fit a bed, bathroom and flatscreen TVIts living region measures 12ft by 6ft and its built-in lavatory is 3ft by 4ft

The accommodation apartment, which needs at least £30,000 spending on it to create it habitable, is slightly bigger than the minimum measurements for a prison compartment Since it went on sale last week, estate agent Lane deceive has had three offersI recon prices are plummeting in Bolton, Greater Manchester I've seen novel 3 bedroom semis fall from 180k to 150k House builders wouldn't reduction 30k if there was a shortage

There is no shortage of property in the UK We have been concreting over our once green land for generations In the past 20 years the height of building has been excessive and obscene, causing congestion, congestion and now water lacksIt's not lack of property that has been creating the supply/demand imbalance, it's the perception that prices will be several percent higher in 12 months occasion

As long as that's the case, populace will do whatever it takes to buy propertyShould interest rates alter this however, you'll find the 'property shortage' will be a thing of the historyIt is not in the Bank of England's permission to control the boom in house prices Their changes in interest speed are aimed to control inflation, which they gauge using the CPI

The CPI does not include the price of mortgagesIt may be that tacitly the store of England are hoping to slow the increasing house prices However even if they are, reports suggest that it will take 2 years for the housing marketplace to respond to changes in interest rates This barely seems suprising given our nations taste for fixed rate mortgages

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