Northern Ireland house prices surge

Northern Ireland's remarkable property boom continues, with figures from the Department for Communities and Local Government indicating that the average cost of a home in the province soared by 51.9 per cent in the year to the end of May.

To some extent prices there are playing a game of "catch-up" with the rest of the UK and with prices in the Republic. The markedly more optimistic political mood in recent months has played its part in generating this particular "peace dividend" for homeowners and an unfamiliar sudden surge in demand for houses in places such as the Falls Road.

However, the official numbers suggested that growth in other UK regions was more muted. There was a fall in house price inflation in eight areas, while the rate remained the same in the North-west. It rose in Yorkshire and Humberside, London and the East.

Scotland saw the biggest easing, from 17.8 per cent in April to 15.5 per cent. Property remains most expensive in London, at an average of £324,084, and cheapest in Scotland at £157,974. The UK's average first-time buyer paid £162,055 for their first home in May.

The director general of the Council of Mortgage Lenders, Michael Coogan, has said that British house prices look set to record their weakest increase in more than a decade in 2008 as higher interest rates bite.

"There will be some, particularly first-time buyers, who will need to change their spending patterns or social behaviour to be able to continue to afford mortgages ... I don't believe there will be a crash. But clearly a slowdown is more likely in an environment of higher interest rates," he said.