London house prices surpass 1989 peak
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Your support makes all the difference.Prices in many areas of central London have passed the peak they set in 1989, Nationwide Building Society said yesterday. House prices nationally rose for the fourth month running in April, with the North-South gap widening further.
Philip Sanderson, head of research, said a shortage of homes coming on to the market was driving prices up. Several buyers were competing for any suitable property.
The election campaign had slightly dampened the level of housing market activity, but the property drought was most to blame for the low level of transactions.
In its latest regional analysis, Nationwide reported that house prices in Greater London had climbed 20.6 per cent in the year to the first quarter to an average of pounds 85,378. This compared with a national average increase of 8.6 per cent, and a decline of 0.5 per cent in Scotland.
Separate official figures showed the number of repossessions fell to the lowest level since late 1989 in the first quarter of this year - down 27 per cent, with 14,869 properties repossessed by lenders.
Mr Sanderson said: "As yet there are few signs the rest of the country will see the strong price gains recently recorded in the South-east." Higher prices would eventually tempt more sellers into the market, but it was difficult to predict when.
The national index increased 0.4 per cent in April, with the average house price up to pounds 57,406. This took the year on year change down from 9.7 per cent in March to 8.9 per cent. The Halifax's house price index, due today, is likely to show a similar April increase, although it is recording a somewhat lower annual inflation rate. Halifax figures have also been showing prices rising faster in London than anywhere else.
The report commented that first-time buyers in London were being forced to move downmarket because of the jump in prices - something that might start to improve the saleability of property at the bottom end of the market.
Mortgage lenders are keen to downplay the idea that there is a housing boom. Reacting to Bank of England figures earlier in the week showing a slight dip in new lending in March, the Council of Mortgage Lenders said this proved the housing market recovery was steady rather than booming.
The lenders' argument that the housing recovery is not heading for a boom because it is patchy is unlikely to entirely convince those economists who think it is stoking up inflationary pressure.
The latest figures for national income by region show the West Midlands was the fastest-growing part of the UK during the 1990s.
GDP per capita was highest in Greater London in 1995, at pounds 12,503.
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