The average price of a house is still rising by nearly #70 a day – despite a raft of increases in interest rates and mortgage repayments, new figures from online property search firm Rightmove showed today.
Annual house price inflation has risen to 12.2 per cent in a further indication that pressure from property shortages has negated any effect from the Bank of England's move to lift interest rates to the current level of 5.25 per cent.
Rightmove’s House Price Index for March shows a monthly rise in values of 1.5 per cent, up from 0.9 per cent in February.
It pushes the cost of a typical home in England and Wales up to #228,183 in March – a rise of #3,381 in just one month.
Buyers now face prices that are #24,784 higher than a year ago – with houses putting on almost #68 for every day of the year.
Miles Shipside, commercial director of Rightmove, said: "With supply shortages rapidly overtaking the effect of interest rate rises, we reiterate our view that moderating house prices growth in the long term is dependent on building more homes where people want to live.
"As we have seen recently, raising interest rates can be used to influence the direction of prices in the short term but do little to address the underlying cause of house price inflation.
"Crucially they cannot address the increasing demand for housing driven by the need of a growing population." London continues to drive the annual inflation trend, with houses in the capital up 21.8 per cent year-on-year.
The average price of a house in London is now #366,302, up 1.8 per cent on February.
Mr Slipside said: "Wealthy city financiers, foreign buyers and big income earners are driving the demand in London and with quality stock at an all time low, there is an exacerbated effect on prices."
Rising property prices will increase pressure on Gordon Brown this week to address the issue of stamp duty and inheritance tax in his Budget on Wednesday.
According to data from Rightmove only 16 per cent of advertised properties are priced below the #125,000 starting threshold for stamp duty.
But with demand exceeding supply in many parts of the country, any benefit to first-time buyers from an increase in the threshold is likely to be lost as it fuels the ability of sellers to up prices further, according to the property website.
Separate figures from Halifax today show that nearly a third of detached properties are now valued above the inheritance tax threshold.
In its latest attack on the Government’s tax policy, the lender said 29 per cent of detached homes are priced above the 2007/08 death duty level of #300,000.
Tim Crawford, group economist at Halifax, said: "We call on Government to raise the inheritance tax threshold to #460,000 to account for the rise in prices in the past decade."