Interest rate rises fail to stem steep housing market growth but RICS says confidence in market is lowest since September 2005

Higher interest rates failed to slow down the housing market in London and the South-East, according to the Royal Institution of Chartered Surveyors.

For Sale sign

The number of estate agents and surveyors reporting higher home prices in England and Wales outnumbered those reporting a decline by 28.9%, said RICS.

A lack of new properties and a high level of prosperity in the City is thought to be behind the current property boom.

The Bank of England raised interest rates by a quarter point to 5.5% last week to stem the steep growth in the market, the fourth rise since August last year. Investors expect a further rise over the summer.

A RICS spokeman said: “Last week’s interest rate hike may not be the last as the housing market has not slowed as quickly as expected, given the initial round of rate rises. With prices buoyant and conditions still tight, another rate rise later in the summer looks likely.”

In spite of the growth, RICS said confidence in the market had fallen to its lowest level since September 2005 and enquiries by new buyers fell for a fifth consecutive month.