UK house price inflation reaches plateau

House price inflation reached a plateau in November although limited supply coupled with strong demand meant prices rose for a 13th consecutive month, a survey showed.

The Royal Institution of Chartered Surveyors said its house price balance eased to 47.4 in November from a revised 47.7 in October but still more than double the long run average of 21.

The sales-to-stock ratio, which some economists regard as a more reliable gauge of the market's strength, rose to 42.5 per cent from 41 per cent in October - the highest ratio in over two years.

"The Bank of England's rate rises have failed to dent the housing market's armour," said RICS spokesman Jeremy Leaf. "Strong employment conditions and a robust economy continue to shield the market from any dip."

Once again, London experienced the strongest price rises on the back of a booming financial services industry. House price growth was also robust in Scotland and Northern Ireland but in both cases inflation has eased from its summer peaks.

New buyer enquiries rose for an 18th consecutive month in November but at a slower pace than recently. Nevertheless the market remained tight with new instructions to sell property declining for a sixth consecutive month.

The survey chimes with other property surveys which portray a robust housing market despite two rises in interest rates since August. Futures markets show investors expect the Bank of England to raise rates again, to 5.25 per cent, early next year.

Nevertheless, an indication that price growth is no longer accelerating - the first time since March - may signal that inflation may start to ease in the coming months.

Indeed, the RICS is forecasting house prices will rise by seven per cent in 2007 following a nine per cent jump this year.