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Pent up demand pushes up prices

29 March 2004
House prices rose 0.7 per cent in March, according to property website Hometrack.

The increase in March builds on the phenomenal 0.9 per cent upsurge in February.

Hometrack doubled its 2004 house price inflation forecast to eight per cent from four.

It pointed to the increase and "pent up" demand in the market as new buyers outnumber new properties 6.5 per cent to 4.2 per cent.

John Wriglesworth, Hometrack's housing economist, said "doom-mongering, headline-grabbing economists" forecasting an imminent crash would have to address their gloomy outlook or "look incredibly foolish."

"Demand by new buyers is outweighing supply and the upward pressure on house prices continues.

"Low interest rates remain, and despite prospects of rises this year, buyers are not deterred from borrowing even higher multiples of their income to afford their desired homes," he added.

Hometrack - which collates data from about 3,500 estate agents - forecasted further interest rate rises from the Bank of England's Monetary Policy Committee in April to take more heat out of the seemingly over-heating market.

The MPC pushed interest rates in February to 4.0 per cent in a bid to temper consumer demand and house price growth.

Last week, the Bank's Governor Mervyn King said he hadn't discerned "any reaction from consumers' to the rate increase, suggesting more rate rises could come in the short term.

Hometrack said the average price of a home now stands at £149,800 up from £148,500 in February.

Prices in London surged 0.8 per cent to £246,900, Hometrack reported.