House inflation still too high for comfort

Three interest rate rises since August have cooled the housing market sufficiently to rein in runaway house price inflation but the rate of increases in house prices still remains too high for comfort, the latest FT house price index shows. 字串1

Prices in London continue to rise much faster than other regions, although large variations within the capital show that the really rapid gains are limited to the most salubrious districts, where demand is boosted by City bonuses and international buyers. 字串7

With house price inflation remaining higher than wage inflation, the Bank of England considers the market remains unsustainably strong. Unless price rises moderate, pressure will intensify on the Monetary Policy Committee to tighten the screw still further on borrowers.

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The annual rate of house price inflation was 7.6 per cent in February, according to the FT house price index, a rate of increase that has remained almost constant since September last year, when it climbed to 7.3 per cent.

Peter Williams, chairman of Acadametrics, the consultancy which produces the FT index, said that both the monthly and annual increases in February indicated that house price inflation had 鈥渞eached a plateau鈥