British house prices jumped sharply last month, according to a key survey published on today, adding to expectations the Bank of England will raise interest rates tomorrow.
Prices rose 1.8 per cent last month to stand 19.1 per cent higher in the last three months compared with a year ago, according to the Halifax House Price Index published today.
One month ago the index, published by the nation's largest mortgage lender HBOS, reported a 2.2 per cent monthly increase in March to give a year-on-year increase of 18.5 per cent.
The figures support other data in recent weeks that shows the British property market has begun to reaccelerate, although the bank said it expects price rises to ease later in the year.
Economists expect widely-held concerns of a housing bubble to encourage the Bank of England to push interest rates up a quarter of a point to 4.25 per cent when its Monetary Policy Committee finishes its two-day meeting tomorrow.
Halifax played down fears the housing market may be headed for a crash, saying the ratio of the value of private sector housing assets to debt was higher than either five or ten years ago.
"The market remains underpinned by sound fundamental factors with high levels of employment, low interest rates and low levels of debt servicing costs driving high housing demand," said HBOS's chief economist, Martin Ellis.
The bank also said that, despite record levels of debt, servicing costs were manageable, echoing recent comments from chancellor of the exchequer, Mr Gordon Brown.
The standardised average price of a house in Britain is now running at £154,304 pounds (€228,000), while the number of first-time buyers fell compared to the first quarter of last year.
The bank expects the increased difficulties faced by potential first-time buyers in entering the market, combined with rising interest rates should "result in a gradual easing in house price inflation during the second half of the year."