UK house prices still climbing

House prices are rising at an annual rate of nearly 20%, the latest survey from the Halifax bank said.

Prices rose by 2.3% in June, giving an annual rate of increase of 19.3%, the Halifax said.

The findings mirror those released by the Nationwide building society on Monday.

Despite the surging housing market, the Bank of England decided to leave interest rates unchanged at 4% after its latest meeting.

The Bank has faced calls to raise rates to slow house price inflation, and avoid the risk of a crash in the market.

Price rises set to ease?

The Halifax said the housing market was being supported by low interest rates, rapid income growth and shortages of suitable properties.

Inflation will ease over the year, but we are not expecting widespread house price falls

Martin Ellis
Halifax

Prices have risen by 11% since the start of the year, with the average house now costing £109,667.

But the bank warned that the current rates of increase were unlikely to last.

"Slower income growth, higher interest rates and lower buy-to-let volumes are likely to act to brake the growth in house prices in the coming months," said Gary Styles, head of group economics at the Halifax.

'Don't panic'

Halifax said it had now more than doubled its forecast for house price growth this year to 15%, from its estimate of 7% earlier this year.

But it said it did not think the market was heading for a collapse similar to that seen in the early 1990s, when many thousands of people ended up with negative equity.

"Our feeling is that people do not need to panic," said Martin Ellis of Halifax.

"Changes in house price inflation can't continue a these rates.

"Inflation will ease over the year, but we are not expecting widespread house price falls."