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Hometrack foresees no end to spiralling prices

House prices are rising at an annual rate of around 15 per cent, according to a survey by market analyst Hometrack.

Its housing demand index for March reports a 1.6 per cent rise in house prices, up from 1.4 per cent in February. This took the national average house price to £120,900 from £118,965 the previous month.

Hometrack says the key to the buoyancy of the market is renewed confidence as first-time buyers try to get on the housing ladder before prices become unaffordable.

This surge in active buyers represented an increase of 10.6 per cent in the number of people looking for a house last month. The increase in Greater London was 13.6 per cent compared with 5.7 per cent in Wales. At the same time, there was only a 2.2 per cent growth in the number of properties for sale nationally. In Greater London, the number of properties available grew by just 0.8 per cent.

Selling prices achieved as a percentage of asking prices rose to 96.5 per cent from 95.7 per cent in February and 94.7 per cent in January. Hometrack says this is the highest percentage for over 12 months.

Housing economist John Wriglesworth says: “With all the measures of affordability still well below previous peaks, helped by interest rates remaining at an all-time low and significant excess demand prevailing in the market, there seems to be little prospect of house price rises moderating, at least in the short term. There is now a real danger of a speculating and escalating price spiral occurring in the market.”

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