UK house prices rose by 0.6% in May, extending a series of strong increases, but housing inflation is set to slow, property website Hometrack said today. The May figure is down from a 0.7% rise in April, and brings the total rise this year to 3.2%.
Hometrack's figures undershoot other housing surveys which have shown house price inflation running at around 2% per month but support the view of a property market that continues to ignore interest rate hikes and steam ahead.
An increase in average sales price as a percentage of asking price also points to further upward pressure on house prices for the rest of the year, Hometrack said.
Hometrack expects the current housing boom to slow. 'While we predict house prices to rise by 8% this year we are now expecting house price inflation to slow down to 4% in 2005,' Hometrack said.
The Bank of England has raised interest rates three times since November - partly influenced by booming house prices - and some economists have said further rate hikes are needed to avoid a housing bubble.
Hometrack said it saw no prospects for a crash. 'The only economic factors that could precipitate a housing market crash are a doubling of interest rates, stamp duty or unemployment. None of these are expected by any economists either this year or next'.
The price of the average house rose to £151,800 sterling and London prices rose above £250,000 for the first time.
