House hunters ignore rate rise

Homebuyers appear to have shrugged off the recent interest rate rise, according to a report out today.

The Royal Institution of Chartered Surveyors says the number of house sales has hit its highest level since February and prices have maintained their "firm" pace of increase.

In its report covering the three months to November 30, the RICS said: "The modest rise in interest rates in November has had little negative impact on the housing market so far." Inquiries from buyers had also held up.

The survey, which covers England and Wales, paints a picture of differing fortunes across the regions.

Some of the organisation's estate agent members in London are anticipating a bumper crop of City bonuses, which they hope will translate into strong sales in affluent areas such as Kensington. But other members said the traditional Christmas slowdown had come early. Most agreed that a shortage of properties for sale was helping to keep house prices buoyant.

The RICS says price rises continue to be driven by the north, the west Midlands and Wales, while prices in the capital are strengthening after a slowdown earlier this year.

Conditions are more sub dued in the rest of the south of England with only modest price rises being reported.

Some RICS members claimed that England's victory in the rugby World Cup had boosted confidence.

Philip Muzzlewhite, at Exeter-based Whitton & Laing, said: "A lack of supply and a boost to the feelgood factor created by our World Cup victory impacts on the local market."

In Walthamstow, north-east London, Arwel Griffith at WJ Meade said: "We expect an increase in buyer confidence despite the recent interest rate rise. The feelgood factor is likely to be fuelled by the recent World Cup victory."

City bonuses are expected to be 15% to 20% higher than last year, thanks to the stock market upturn, and Luke Pender-Cudlip at the Kensington branch of upmarket estate agent Knight Frank said: "We expect a mini tidal wave of City bonuses in 2004."

While property sales have risen, the number of homes for sale has dropped to its lowest level since June 2002, the RICS said.

The average member company has 61 properties on its books, down from 140 or more in the late 1990s.

As is expected in the run-up to Christmas, there has been a slight decline in the number of people looking to buy, but un derlying demand remains stable.

"The slight interest rate rise in November and talk of a rising trend doesn't seem to have put off buyers or sellers," said RICS housing spokesman Ian Perry. "Everyone seems confident that more property will come on to the market in the new year, but intense competition will remain if this is accompanied by an increase in sales activity."

Price rise forecasts for the next few months have diminished, though prospects are still seen as "robust" in London and the north-west.