House prices in Britain soared in May to push the annual inflation rate to its highest in a year at nearly 20 per cent, the Nationwide building society said today.
Analysts said today the report is further evidence that three interest rate rises since November have not dented Britons' appetite for getting into debt to acquire property and make a Bank of England rate rise next month seem even more likely.
But an ever-dwindling number of first-time buyers, along with rising debt burdens means there is a growing risk of a long period of tepid housing market activity with smaller price gains, the Nationwide warned.
The strong 1.9 per cent monthly rise in May is only slightly less than the 2.1 per cent gain recorded in April and puts year-on-year house price inflation at 19.5 per cent , the fastest since May 2003 and a pickup from 18.9 per cent last month.
By comparison, British consumer prices are rising by only 1.2 per cent and Britons' average earnings excluding bonuses, at last measure, were climbing by 3.9 per cent .
The latest increase brought the average price in May to £149,020 (€224,000), up from £145,91 in April.