House prices are being pushed up by a shortage of properties, it was claimed yesterday.

As the Halifax announced a two per cent price rise in the past month, independent Essex-based agent Spicer Haart said thousands of people are looking for homes but demand is far outstripping supply.

Russell Jervis, managing director of Spicer Haart group member Spicer McColl, said 18 months ago a two-bedroomed terraced house in New Town, Colchester, would have fetched between £40,000 to £45,000. Now buyers are paying £10,000 more.

Spicer Haart is seeing an increase in its summer business at a time when its usually experiences a downturn. Mr Jervis thinks prices will continue to rise.

"With interest rates stabilising and the current deals with mortgage lenders, people can fix their rates for the next five years.

"If activity continues at this level we will be facing a mini-boom."

Kevin Frith, office manager with Colchester High Street estate agents Knight Matthews, said demand was high everywhere.

He said prices have been going up in the last 18 months, most notably since the start of 1999.

"Quite a lot of sales that we are doing are happening in four weeks which is ever so quick."

Figures released by the Halifax yesterday reveal house prices have increased by 5.7 per cent compared to a year ago, and prices rose 2.1 per cent in May.

Mr Frith said they frequently saw houses sell for five to ten per cent more, and sometimes this was compared to prices a few months ago.

He said: "Yes we are selling properties quickly which we like to do, although we are in a situation of not doing the level of business we should be doing because the properties are not coming up.

"We do not think prices will go crazy. Yes there are a few young people who did not go through the bad times but the majority of homeowners did."

Mr Frith said he expects prices to rise until the autumn.

The Halifax said a combination of the lowest mortgage rates in 30 years and improving consumer confidence has caused the recovery.

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