House prices on the rise?

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May saw the strongest house price rises for two years, according to surveyors.

Figures from the Royal Institution of Chartered Surveyors (RICS) show that 20 per cent more of its members reported a rise in house prices than a fall, compared to 15 per cent in April.....

Last month was also the 12th in a row in which buyer enquiries rose, with 22 per cent more surveyors reporting a rise than a fall, up from only five per cent in April.

This suggests that demand is unaffected by the recent stock market turbulence and speculation over interest rate rises.

The number of houses being put up for sale also rose significantly – by 18 per cent – prompted by factors including rises in unemployment, the implementation of regulations governing houses in multiple occupation (HMO), and a desire to sell before the arrival of home information packs (HIPs) in less than a year.

RICS spokesman Jeremy Leaf said: "The strength of the housing market suggests consumer confidence in the UK economy.

"Buyers are trading up the housing ladder and have blown dust from their wallets as interest rates remain stable. Prices of family homes continue to outpace flats for a third consecutive month.

"However, the upturn in the number of sellers will keep a lid on house price rises going into the second half of 2006. The cost of HIPs and new HMO legislation may encourage more people to sell before June 2007, while the fear of interest rate hikes and a volatile equities market is likely to have a cooling effect later in the year."

The RICS' survey follows the pattern of the FT Acadametrics and the Department for Communities and Local Government analyses in providing some cheer for the housing market.

Mortgage lenders Nationwide and Halifax, on the other hand, only recorded modest house price rises in May, suggesting the market was stalling