July 9 (Bloomberg) -- New Zealand house prices rose at the fastest pace in 13 months in June, suggesting the central bank will keep interest rates at a record high this year.

House prices surged 12.2 percent from a year earlier, according to a report released in Wellington today by Quotable Value New Zealand Ltd., the government valuation agency. That's the largest increase since a 12.4 percent gain in May 2006.

Rising property prices bolster homeowners' wealth, encouraging them to borrow and spend more, which may fan inflation. Central bank Governor Alan Bollard raised the official cash rate last month to a record 8 percent, saying a housing boom and rising employment were stoking domestic demand.

Following is a table of the percentage change in national house prices and prices in urban areas, in Auckland and in Wellington.

                     June        May        April     March
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National             12.2%      11.1%      10.6%       9.8%
Main Urban Areas     12.2%      10.8%      10.3%       9.4%
Auckland Region      11.2%       9.5%       8.2%       7.5%
Wellington Region    15.8%      15.1%      14.7%      13.5%
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To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

Last Updated: July 8, 2007 15:44 EDT