House prices in London rise by 10%

THE UK housing market could be set for a bumper 1999, according to new research, with house prices in some parts of the country rising by as much as 10 per cent over the last 12 months.

The quarterly Halifax housing index, which came out this morning, reveals that home-owners in London, the North West and Northern Ireland have benefited most from the recent recovery in the housing market. Prices in all three of these regions are up by more than 2.5 per cent since the start of the year.

In Greater London and Northern Ireland, the annual rates of house price inflation are running at 9.6 per cent and 10.1 per cent respectively, according to Halifax research. The average price paid per house sold in Greater London is pounds 114,666, compared to a nationwide average of pounds 73,657.

The situation is less rosy, however, in other areas, some of which have seen house prices continue to fall. Scotland, Wales, East Anglia and most of Southern England have seen prices decline since January.

There have also been falls in house prices in the West Midlands, Halifax said, possibly because of the damage inflicted on economic confidence by uncertainty over the future of Rover's Longbridge plant.

On average, house prices in the UK rose by 0.2 per cent in the first quarter of the year, according to Halifax, and have risen by 4.4 per cent over the last 12 months.

Over the longer term, Halifax said it was "cautiously optimistic", citing the current low interest rate environment and the "modest impact" of the Budget as factors that would support property prices going forward.

Other experts agreed with Halifax's assessment of the housing market, saying that prices were on the up, particularly in London, but there was as yet no danger of overheating.

Harry Hill, the managing director of Countrywide Assured, the estate agency group which yesterday reported record monthly trading figures, said: "The market is showing a lot more resilience, but it's against a very subdued background."

Yolande Barnes of the property consultant FPD Savills said: "In the mainstream market there is scope for prices to rise substantially."

In a separate survey, Nationwide building society found there had been a "marked pick-up" in house prices, and increased its forecast for 1999 house price inflation from 3 per cent to 4.5 per cent.

According to Nationwide, the Bank of England's recent aggressive interest rates cuts had substantially contributed to the improved housing market sentiment.