The strength of house price inflation has surprised the Bank of England, according to Monetary Policy Committee member Kate Barker.
Housing market surveys for August showed robust price growth, indicating a surprise rise in interest rates to 4.75 percent last month has had little effect on demand.
With overall inflation running well above the Bank's 2.0 percent target and economic growth outpacing forecasts, many economists believe another rate hike is likely before year end.
House prices are rising faster than earnings and I have to say that's a surprise, Barker said in an interview with the Daily Telegraph, published on Tuesday on its Web site at www.telegraph.co.uk/business.
In the very long run, it is difficult to think of house price growth being perpetually above earnings, unless there's something else going on, like a constraint of supply.
The Nationwide Building Society said house prices jumped sharply in August, lifting the annual rate of price inflation to 6.6 percent its fastest since April 2005.
A Halifax survey also showed strong property inflation, with prices up 8.2 percent in the three months to August on the same period a year ago.
The last earnings reading, on the other hand, showed wages rising 4.4 percent in the three months to July compared to the same period a year ago, slightly below forecasts.
The Bank had expressed concern about the possibility of higher inflation seeping through to wages and Barker told the Telegraph that was a key reason for hiking rates last month, especially given sturdy economic growth.
This doesn't seem like a situation where what you're most worried about is growth falling away, she said.
So the risk that inflation in the autumn would have a more significant effect on wage setting was what lay behind the August rate rise.
BoE Governor Mervyn King has said inflation may rise above 3.0 percent in the short term, noting the effect of higher education fees and soaring utility bills.
If inflation moves more than 1.0 percent above or below the 2.0 percent target, King is required to write an explanatory letter to the government.