House price rises defy doom-mongers

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The Independent Online

House-price inflation is surging again, with the value of homes likely to rise by a fifth this year, two studies show. The property website Rightmove said prices were rising at twice the rate they did in 2003, with the value of a typical home soaring by £150 a day.

House-price inflation is surging again, with the value of homes likely to rise by a fifth this year, two studies show. The property website Rightmove said prices were rising at twice the rate they did in 2003, with the value of a typical home soaring by £150 a day.

Prices in England and Wales had risen 8 per cent since the beginning of the year, Rightmove said, compared with an increase of 3.8 per cent during the first part of 2003. And a survey by the National Association of Estate Agents (NAEA) found the cost of housing jumped 2 per cent in March alone, with price rises in London close to the national level after a lacklustre previous 12 months.

Rightmove said the average home was worth £184,582 in early April, £13,647 more than at the beginning of January and 50 per cent more than at the start of 2002. Average house price inflation is at 14.4 per cent, up from a low of 9.1 per cent in September last year, and the group said prices could rise by more than 20 per cent in 2004.

Miles Shipside, a Rightmove director, said: "What differentiates this year from last is that in 2003 London and the Southeast were very sluggish while the rest of the country generally performed strongly. In 2004, all parts of the country are firing on all cylinders. I can easily see house-price inflation hitting 20 per cent this year, twice the level we saw last year."

Rightmove said prices increased in all parts of the country during the month, with Yorkshire and Humberside reporting the strongest rise of 5.8 per cent, with the West Midlands at 5.3 per cent and East Anglia at 4.1 per cent.

The NAEA survey found sellers were getting 97.7 per cent of the asking price, the highest since 2002, and estate agents were more bullish; more than two-thirds report higher price rise expectations than at the start of the year.

Melfyn Williams, the NAEA president, said: "Buyers are having to pay even closer to asking prices to secure the properties they want, another indicator of price rises to come."

The continued strength of the housing market will confound the monetary policy committee of the Bank of England, which expects house price inflation to reach zero in 2005. It will also heighten fears of a house-price crash, though both reports insisted that was unlikely.

Mr Williams added: "Recent reports of an imminent crash have as much foundation as a house built on sand. These commentators are detached from the reality on the ground, where estate agents are united in predicting another year of strong rises across the country."

Mr Shipside said: "Specula-tors look at the ratio of house prices to incomes and conclude affordability of properties is becoming stretched and prices will fall. What they need to look at is affordability of homes at present interest levels of 5 per cent or so."

Tony Dye, the City investment guru whose prediction of the burst of the dot.com bubble earned him the nickname Dr Doom, has accused lenders of fuelling an overheated housing market. The Bank of England has warned rates may rise soon.

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