LONDON: Average asking prices of British homes recorded their strongest annual increase in over a year in the period from mid-April to early May, a survey by the country's leading property website Rightmove indicated.
Rightmove said the asking prices rose 5.9 per cent on a year ago during this period, up from 4.1 per cent in the preceding 30-day period. This is the strongest rise since the website's survey during March-April of 2005.
Rightmove said the average asking price for a residential property in the county is now 209,829 pounds, which constitutes a gain of 1.1 per cent over the website's March-April survey.
Saying that pressures on incomes are not hurting the housing industry, Rightmove predicted that house price growth for 2006 will be 8 per cent against its earlier forecast of 5 per cent.
House prices have risen in almost every month since August 2005, when the Bank of England reduced the borrowing rates. The central bank is hopeful that property values, along with higher consumer spending will provide better support for the growth of Britain's economy.
Rightmove's director Miles Shipside said the rates may flatten out in the long run, but it is not likely to fall substantially. Shipside expects the demand for housing in London and southern England to go up, which will push the asking prices in these areas to nearly 10 per cent this year.
The survey showed that average asking prices in Greater London has grown by 8.7 per cent on a year ago. In some areas in London, the growth has been as much as 20 per cent on the year.
Mortgage lender Halifax had said earlier in May that house prices had risen 2 per cent on the month in April -- the strongest monthly rise in two years. The annual rate of house price inflation, according to Halifax was 8 per cent, which is the highest in over a year.
Shipside said policymakers should not use interest rates as a tool to control housing demand. Increasing availability of housing and relating new houses with demands from buyers is the best practical way to make property affordable to all, he said.
Economists feel the central bank will now be forced to increase the interest rates. An indication to this effect has come from the bank's governor Mervyn King, who had said last week that house prices at the existing levels seemed remarkably high "relative to those measures that put it into context."
Britain's land registry, in a report last week, said house sales had increased by almost 40 per cent in the year to March.
