London continues to drive property prices

Posted: 26 Jun 2006 17:28:17 GMT

House price inflation continues to be driven by price increases in London, according to the latest figures from Hometrack.

The housing information website reports that house prices in the capital rose by 1.1 per cent in June, almost twice the national average of 0.6 per cent.

Further away from London growth remains more subdued, although prices have picked up moderately in recent months.

"Looking back over the first 6 months of the year there is a stark difference in performance between London and the rest of the country," said Richard Donnell, director of research at Hometrack.

He said that the major imbalance between supply and demand in London has caused prices to rise by almost 6 per cent during the first half of the year, whilst growth in the North West, Yorkshire and Humberside, the East Midlands and the North has been less than 1 per cent.

"The differentials in growth reflect the fact that the London housing market significantly under-performed the rest of the market between 2001 and mid 2005. A modest re-alignment of prices over this time meant that there was scope for what have been relatively high price rises, supported by a lack of housing for sale and expanding London economy," Mr Donnell explained.

Hometrack's survey shows that house prices moved higher across 42 per cent of the country, falling in just 2 per cent of areas and remaining static across 56 per cent of the 2,200 postcode areas across England and Wales.


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