U.K. house prices rise 1.1 per cent in June

U.K. house prices rise 1.1 per cent in June
LONDON: The U.K. house prices rose 1.1 per cent in June -- the highest rate since December 2006 -- in spite of the high interest rates and bad weather prevailing in the country.

In its monthly house price report, the Nationwide building society said Thursday the increase was more than double the 0.5 per cent rise recorded in May and just below the 1.2 per cent increase recorded in December. The average price of a typical house in the country stood at 184,070 pounds, 18,000 pounds higher than the average price that prevailed in June 2006. Nationwide said the increase amounted to a rise of 50 pounds a day.

Fionnuala Earley, chief economist at Nationwide, said the heavy rains in June did not have any impact on the housing market as "house price inflation bounced back during the month."

The annual rate of increase has gone up 11.1 per cent against May's 10.3 per cent, said Nationwide. Economists felt the rise could lead to the Bank of England once again actively considering increasing the lending rates. Most of them expect the rate to go up to at least 5.75 per cent. The bank's Monetary Policy Committee is meeting next week. The members of the committee had voted to hold the rates at 5.5 per cent in May.

Earley said, "The resilience of the housing market will be another component to add to the rate rise camp's argument."

Nationwide, however, feels that the housing market will slow down in the second half of the year as the higher interest rates could start to have the impact. It says the growth would be in the range of 5 per cent to 8 per cent for the full year.

Earley said the rising interest rates could have an effect on the rapid growth that is being witnessed in the buy-to-let sector.

Meanwhile, the new prime minister, Gordon Brown, had announced that he intends to make housing a priority for his government. This has added an impetus to the housing sector.