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Asking prices surge to three-year high

Tuesday, 17 May 2011 1:20 PM

Asking prices rose to their highest level for three years in May, according to the latest survey by Rightmove.

The property portal said the average asking price for a home in England rose 1.3 per cent to £238,874. That’s the highest seen since June 2008 and is only 1.5 per cent short of the peak of the market in May 2008.

Rightmove said low interest rates and lack of mortgage availability are enabling the market to stay in "low transaction limbo", with few forced sellers to drive prices down and few buyers that can proceed.

However, a dip in seller numbers caused by the extended bank holiday period could also have pushed up asking prices.

The rise was especially strong in the East Midlands (up 5.9 per cent), East Anglia (4.6 per cent) and the North of England (4.0 per cent).

The South saw far less change with asking prices in London unchanged on April and up less than one per cent in the South-East and the South-West.

The North-West was the only region to see a fall, with asking prices dropping by 1.9 per cent.

Miles Shipside, director of Rightmove, said: "The Bank of England’s decision to hold interest rates at unprecedented low levels, compared to all other property market downturns, has disrupted the traditional economic formula of an excess of supply over demand leading to lower prices.

"One interest rate rise won’t immediately derail the market but if we see several in quick succession it will quickly hit the buffers."

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