House prices still rising

A new report suggests house prices are continuing to rise.

14:47 04 August 2004

Just a day before the Bank of England decides whether it should increase the rate of borrowing a new report suggests house prices are continuing to rise.

The Halifax House Price Index shows a 1.3 per cent rise in July, leaving house prices 22.1 per cent higher than the same period in 2003. However, the rate of monthly increases has slowed.

The average cost of a home rose to 161,831 and this is likely to affect the forthcoming decision on interest rate rises by the Bank of England. The Monetary Policy Committee has already announced four interest rate increases since November.

Martin Ellis, chief economist at HBOS, the UK's largest mortgage lender, said: "It seems clear we have not yet seen the full impact of the Bank of England's recent rate moves on the property market."

However, he added: "We expect the series of rate rises since late last year to continue to act as a brake on house price growth over the coming months."

It is expected that Bank of England will raise interest rates tomorrow by a quarter-point to 4.75 per cent.