UK house prices rose 1.6 per cent in the year to May, but a cooling could be on the way in the coming months, a survey said today.
According to property consultant Hometrack, the rise was mainly driven by gains in London, with two-thirds of the UK experiencing no monthly growth in prices.
House prices rose 0.6 per cent on the month, with a 1.2 per cent rise in London fuelling the market. The average house price has reached £164,500, the firm said.
"The London effect has been flattering the overall picture of a relatively buoyant housing market. The reality is that house price growth remains limited across large parts of the country," said Hometrack's research director, Richard Donnell.
He said prices were static across two-thirds of British postcode areas and warned that talk of higher interest rates and affordability constraints could cap future gains.
"The prospects for the second half of the year are not so good," he said, forecasting growth of just 3 per cent in 2006.