House price inflation in Britain was steady at just under 10 per cent in February, official data showed yesterday, more evidence that two interest rate hikes have done little to cool a hot property market.

British house prices rose 9.8 per cent in February compared with a year earlier, up slightly from 9.7 per cent year-on-year inflation seen the month before, the Office of the Deputy Prime Minister (ODPM) said.

The data showed the mid-adjusted average house price in Britain was £160,937 (€245,071) in February, down a tad from £162,559 in January.

The figures are not seasonally adjusted.

The report came just days after the Bank of England opted to leave interest rates unchanged at 4 per cent, despite growing concerns that soaring house prices threaten to push up household debt levels even further. It has raised rates by a quarter point twice since November.

House prices are a closely watched economic indicator in Britain where two-thirds of families own their own homes, and where the rising value of homes has helped fuel a consumer spending boom.

"There still seems to be plenty of evidence that the housing market is still strong," said Mr George Buckley, UK economist at Deutsche Bank.

The ODPM data are more subdued than recent figures from mortgage lenders Halifax bank and Nationwide building society which both reported inflation closer to 20 per cent during March, but they still depict a booming housing market.

The report coincided with the latest dire prediction from a City analyst on the fate of British housing.

Mr Tony Dye, a well-known fund manager famed for correctly predicting the end of the tech-inspired equity market bubble, said in a newspaper article yesterday that British house prices are about to crash and will fall by 30 per cent.

Yet so far there have been few signs that is about to happen, with all evidence pointing to a re-acceleration in house price inflation after a slight cooling late last year.

The Bank of England is predicting a soft landing in prices, although some officials have warned in recent remarks that the longer the current boom goes on, the bigger the risk of a sharp correction.

"I can't see a great deal on the horizon that's going to cause this bubble to burst," said Mr Buckley.

"That said, with every month that goes by, the risk is increasing that if there was a crash then the crash would be hard."

Annual house price inflation in London, which had slipped toward the end of last year, rose again to 5.7 per cent, up from 5 per cent in January.

That put the average price in the capital, London, at £243,231.