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Fast March for house prices

House prices picked up again in March as the market absorbed interest rate rises, says the Royal Institution of Chartered Surveyors.

Rics research shows that house prices rose for the 17th consecutive month in March, with the pace of increase picking up for the first time in five months.

A total of 25.5 per cent more chartered surveyors reported a rise rather than a fall in house prices, up from 24.8 per cent in February.

The pace of increase remains above the long-run average of 21.6 per cent.

Interest rates have risen from 4.5 per cent at the beginning of last August to 5.25 per cent at present.

A recent report from Datamonitor warned of the threat of a sharp fall in prices because of falling demand due to the rising level of personal debt, rising interest rates and relaxed credit criteria on sub-prime mortgages.

Rics spokesman Jeremy Leaf said: “The housing market has absorbed the initial interest rate barrage but history tells us that further rate rises could knock confidence and activity significantly later in the year.

“However, house prices are unlikely to fall in the short term while the economic outlook remains robust. Market conditions remain tighter than ever, with households as yet under no pressure to sell, although mortgage repayments remain a concern for many following the Bank of England’s recent monetary tightening.”

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