House prices expected to keep on rising as demand outstrips supply

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The Independent Online

Property agents in all regions of the country expect house prices to carry on rising into the new year, according to a survey published today. A fresh fall in properties for sale has combined with strong interest from potential buyers to increase the imbalance between demand and supply, the Royal Institution of Chartered Surveyors (Rics) said.

However its main index on prices dipped for the first time since March although it still showed the 13th consecutive month of growth.

"The Bank of England's interest rate rises have failed to dent the housing market's armour," said Jeremy Leaf, an Rics spokesman.

"Strong employment conditions and a robust economy continue to shield the market from any dip."

Rics said that the expected rate rise in February to 5.25 per cent would slow the market, although it is expecting another inflation-busting year of growth in 2007 at 7 per cent, a slight slowdown from 9 per cent in 2006. "This will give no joy to first-time buyers, creating a bleak outlook for many across the country," Mr Leaf said.

The monthly survey of Rics members showed that 47.4 per cent more reported a rise than a fall in house prices, down from 47.7 per cent in October, but still more than double the long-run average of 21 per cent

New buyer enquiries rose, albeit at a slower pace, while stocks of unsold property remain at the lowest level since August 2004.

The ratio of completed sales compared to the stock of available property rose to 42.5 per cent from 41.0 per cent - the highest ratio in two years and a strong indicator that the market remains buoyant.

Rics said that London and the South-east showed the strongest rises. Other regions showed a more modest rise although surveyors in all areas expected further rises over the next three months.

Almost nine out of ten house hunters expect house prices to rise in 2007, a separate survey from showed yesterday.

This compared with the 57 per cent who expected an increase in 2006 this time last year. The average forecast for 2007 is for a 5.4 per cent rise. Warren Bright, propertyfinder's chief executive, said: "Our survey of estate agents has confirmed the critical shortage of properties in the housing market."