Leap in price of houses biggest in 20 years
Tuesday 22 April 1997
Its regular survey of estate agents showed more than a tenth reporting that house prices have climbed by more than 5 per cent in the past three months - the only time apart from 1988 that the response has been this strong in the 20 years since the survey began.
The housing recovery would continue, the institute predicted, thanks to the tax cuts and windfalls of free building society shares. Ian Perry, a spokesman, said: "Combined with a marked rise in the number of valuations being carried out, this means we can look forward to more property coming on to the market."
However, the recovery has been uneven. London, the south-East and West Midlands account for the upbeat results. A net balance of 90 per cent of the respondents in London said they had seen prices increase, followed by 87 per cent in the South-east.
At the other extreme, the positive balance was only 15 per cent in the East Midlands, and 33 per cent in Yorkshire and Humberside.
This could not be described as a national housing boom, the survey observed. Apart from anything else, the number of transactions is running at an annual rate of about 1.3 million against 2.2 million in 1988.
Even so, Mr Perry said, "The housing market seems to be immune to the election." Predictions of an increase in interest rates in May and of the possible phasing out of tax relief on mortgage interest had not had any appreciable effect.
House prices remain the clearest signal of the strength of the housing market. Other recent figures have pointed to a cooling off in the pace of activity in the past two or three months.
For example, banks and building societies reported a slight decline in new mortgage lending last month. The number of loans approved by building societies returned to the same level as a year ago after picking up sharply last autumn.
The mixed signals mean economists are divided in their views about the underlying health of the housing market. Simon Briscoe of investment bank Nikko predicts there will be no boom "this side of the millennium". Others say that, although talk of boom is exagg- erated, house price rises this year could be in double digits.
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