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High housing demands continue to inflate prices

February's house prices have risen again by 0.7 per cent. The highest monthly increase since May 2004 highlights the discrepancy between property supply and demand, according to a survey by Hometrack.This latest rise, which affected 42 per cent of UK regions, brings annual price inflation on properties up to 6.4 per cent.The 14 per cent increase in properties on agents' books is not enough to sustain the 23 per cent rise in househunters recorded this month.Hometrack attributed the inflation to the fact that demand is surpassing supply, a trend that means people who can afford to invest more in property can dictate the market.Richard Donnell, Hometrack director of research explained: "Below average levels of property transactions - as a proportion of overall housing stock - are acting as a support to prices. As a result we are seeing property transactions, and pricing being set by those who can afford to move - that is to say existing owner occupiers, buy-to-let investors and the growing number of 'assisted' first time buyers." The direction of the housing market does not look set to change at any time soon, Mr Donnell predicted: "In the absence of any external shock to demand and the apparent willingness by purchasers to pay what is necessary to access the market, then house prices look set to increase further over the coming months."

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