London homes selling, but North lags behind

Homeowners hoping that the past few months' price rises spell an end to years of housing market blight may be in for a rude shock. The key determinant of whether a property constitutes a worthwhile investment or a dud buy is now largely its postcode.

For all the talk of a widespread recovery, price rises are subject to major regional fluctuations. Last week, Halifax Building Society issued quarterly figures showing prices have risen 5.2 per cent in the past 12 months. But the variations are enormous. In London, prices are up 10.1 per cent on last year, while Yorkshire and Humberside saw a rise of just 2.2 per cent.

In Scotland, a report from Royal Bank of Scotland late last month showed that house prices had fallen by 2.2 per cent on average compared with last year. Sales plummeted by more than 20 per cent over the same period, only partly the result of a fall in council house sales since local government reorganisation.

Andrew McLaughlin, a housing economist at RBS, said: "Scottish data, when taken with recent unemployment and mortgage lending figures, provide further evidence that the Scottish economy is lagging behind the UK economy this year."

Lingering hopes of peace in Northern Ireland have helped push prices up by 18.5 per cent in the past year. However, even before last week's resumption of bombings in the province, enthusiasm was already cooling: in the past three months prices have risen just 1.1 per cent, less than most other parts of the UK.

Estate agents remain bullish. The Royal Institution of Chartered Surveyors, says in its latest survey that a majority of estate agents in England and Wales are reporting higher prices.

But even the RICS admits that the proportion of members with rising house prices in London is higher at 84 per cent than in Wales, with just 16 per cent. Moreover, property type determines both demand and higher prices: two- and three-bedroom homes are the most desirable while one-bed flats lag behind.

The speed at which homes are sold is another indicator of the uneven recovery. Research from Black Horse Agencies, the national estate agency chain, shows that sales are faster now than at any time in the past 12 months. The average time to sell a house from initial instruction is 16 weeks, compared with 21 weeks in June.

Yet when broken down into regions, the picture is different. In the South- east, it takes an average of 12 weeks to sell a home, while in the North- west, the time taken extends to 23 weeks.

Local variations are even more telling. Where demand is high, such as in Luton or Norwich, it may only take four to six weeks to sell a property. But in Macclesfield or Blackpool, the average may be two, or even three times as long.

Or take gazumping, the bugbear of the Eighties, which is said by estate agents to be making an unwelcome return in some areas, especially London. Even here the picture is uneven. The final selling price of properties in the south-east is still 95 per cent of the asking price, only 1 per cent higher than a year ago. Meanwhile, in the North-west buyers are negotiating down the selling price of a property by almost 10 per cent.