Rate of house price inflation doubles in one month

House prices have risen by 2% in the past month as the property revival gains momentum, according to a survey published today.

The increase recorded by the property website Rightmove pushes up the price of the average British home by £4,150 to nearly £210,000. The increase is nearly twice the level recorded last month and puts house price inflation at 5.6% for the year to May 6.

Rightmove says property shortages are outweighing the effect of affordability constraints. As a result, the website has increased its forecast for house price inflation for this year to 8%, compared with the 5% that it was predicting at the turn of the year.

Miles Shipside, commercial director of Rightmove, said: "The housing market is set to defy the downward pressure from increasingly stretched affordability, with double the rise that was forecast by the industry just five months ago."

At the start of the year, price rise forecasts from the lenders Nationwide and Halifax, the Royal Institution of Chartered Surveyors and the Council of Mortgage Lenders all ranged between zero and 5%.

Mr Shipside said: "The supply and mix of new housing are failing to keep pace with demand in many parts of the country, pushing up prices."

Some regions, such as London and the south, may see rises of up to 10% this year, the survey says, partly because of wealthy City financiers and foreign buyers. The average London property has increased in value from £284,000 to nearly £309,000 in the past year.

In the last month the fastest-moving areas in and around the capital have been Kensington and Chelsea, up 8.7%; Kingston upon Thames and neighbouring Richmond upon Thames, which recorded monthly rises of 3.9% and 3.4% respectively. The average price of a home in Kensington and Chelsea is now £768,000, while in Kingston and Richmond averages are £376,000 and £388,000 respectively.

"It can't keep rising like this," Mr Shipside said, "but will flatten out rather than fall back substantially."

The affordability factor was expected to keep property price rises in 2006 broadly in line with inflation and average wage rises. Rightmove said it still believed demand would level off towards the second half of the year, even though it is a lot more buoyant than this time last year, due to the shortage of properties for sale.

A study by Wriglesworth consultancy last week showed an 11% rise in the number of sales in March and April compared with the same period in 2005. Overall, demand over the past year has been 25% higher.