The number of new mortgage approvals for home purchases were a seasonally adjusted 116,000 in March, up from 114,000 in February, according to fresh figures released by the Bank of England.

Approvals, which are an indicator of housing market demand, are up 27.5% from the same period last year, and have stayed above their long-run average level of around 100,000.

RICS continues to believe the number of housing sales will rise in 2006, for the first time since 2002.

The recent turnaround in the economy has benefited housing activity and prices. Consequently, RICS now believes that it will be difficult for the Bank of England to cut interest rates further, and in actual fact, interest rates may very well rise later this year if the housing market remains strong and the economy continues to strengthen.